WASHINGTON, DC: According to a business that monitors counterfeit and fraud in the chip sector, a severe semiconductor scarcity led to a record number of wire fraud instances reported by desperate purchasers last year.
ERAI Inc recorded 101 wire fraud instances in 2021, up from 70 in 2020 and 17 in 2005, according to the U.S.-based company.
Companies seeking chips that they couldn’t obtain from reputable and approved distributors were trying to purchase them from shadier brokers and sending money for things that were never delivered, according to ERAI president Mark Snider.
Reporting is optional, and chip brokers in China were responsible for the majority of wire fraud, he added.
Industry insiders say that ERAI is the primary database that businesses utilize for negotiating counterfeit chip difficulties and reporting fraud since GIDEP, or the Government-Industry Data Exchange Program, the government’s database for counterfeit components, does not permit anonymous reporting.
However, according to the most recent data, there were 463 counterfeit chip occurrences reported to ERAI in 2020 and 504 in 2021. It significantly decreased from 963 in 2019.
Snider said that the pandemic-related shutdowns in China may make it more difficult for counterfeiters to do their business. He also claimed that fake goods are becoming more sophisticated and eluding detection.
The Center for Advanced Life Cycle Engineering, a research center at the University of Maryland, and business together hosted the Symposium on Counterfeit Parts and Materials, where the data was presented.
The conference’s lead counterfeit researcher, Diganta Das, said that the ERAI data provided a useful trend analysis.
The actual figure, however, was probably much higher because businesses sometimes choose not to record purchases of counterfeit chips out of concern for brand harm.
