Fighting a Flood of Counterfeit Tech Products

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Counterfeit components may even be infiltrating authorized channels. Andrew "bunnie" Huang is an engineer at Chumby Industries, maker of Internet-connected alarm clocks. While at work on one of Chumby's products in December, Huang found a batch of suspect Kingston memory cards, he wrote in a detailed Feb. 16 blog entry. All had come from the same authorized Kingston dealer, which claimed the cards were authentic but ultimately provided a refund. The construction of the cards in question "is similar to another card of clearly questionable quality, which leads me to question Kingston's judgment in picking authorized manufacturing partners," Huang says.

In January, Kingston began shipping memory products with anticounterfeit labels to better prevent fakes from being sold as authentic products, the company said in February, although it didn't say its actions were connected to Huang's discovery. Kingston spokesman David Leong declined to comment.

Would-be victims are banding together. The Defense Dept. and the National Aeronautics and Space Administration have helped create standards that they hope will help users avoid buying counterfeit parts, says Debra Eggeman, general manager of Independent Distributors of Electronics Assn., a trade organization that teaches members how to detect counterfeit products. Blacklisting is a common remedy when distributors are found to have sold counterfeit parts.

shavings can foil the acetone test

Finding fakes isn't always easy. At PCX headquarters, Dimmler displays what looks like a movie reel, but which consists of a string of about 1,000 tiny chips. Then he pulls out a quart-size bag containing countless chips no larger than flakes of finely ground pepper—so small they need to be viewed under high-powered microscopes. To an untrained eye, the components all look real. To examine them, Dimmler inspects such minutiae as logo placement, the tightness of vacuum-package sealing, and the depth of etchings on a chip's face.

Complicating matters, counterfeiters are growing more adept at disguising their handiwork. For instance, some save the shavings from original, valid chips and then blend them into coatings for fakes to prevent the acetone test from uncovering fraud.

Global IC Trading Group, an independent distributor that buys and sells electronic components, including memory, processors, and integrated circuits, has invested in high-tech equipment to test components as they come through its Laguna Hills, Calif., operation. In addition to conducting physical inspections and swabbing products with alcohol or acetone, the company X-rays components and de-encapsulates them to inspect the interior die for markings and dates. "We've probably invested about a quarter of a million dollars in less than two years in testing equipment," says Lori LeRoy, the company's co-founder. Global IC Trading Group is now mulling the purchase of a new machine, which would cost from $40,000 to $50,000, to examine the elements on a chip.

Intel, the world's largest chipmaker, has developed software to help customers identify the processor inside a machine and ensure that it's performing up to spec. Such steps have helped Intel rein in a problem that was more pervasive during the 1990s, says Intel spokesman Chuck Mulloy. The issue has "never gone away but it's not nearly as bad," Mulloy says.

PCX visually inspects all products but conducts acetone and other tests on about 10% of the roughly 50-to-100 products it receives daily. Two years ago, the company was able to fit all the counterfeit items it had detected on a single shelf that had space for thousands of variously sized components. The number of shelves has since expanded to three. Before long, Dimmler says, he'll need to devote further space for fakes.

King is a writer for Bloomberg BusinessWeek in San Francisco.

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