America Semiconductor May 2014 EETAsia article

OSM-distributor cooperation mitigates spread of fake chips

Counterfeit chips compromise the semiconductor supply chain. Worse yet, OEMs are left to their own devices in searching for means to combat this problem when in fact, the semiconductor industry should be working with strict parameters to protect the integrity of devices in the supply chain.

The danger of counterfeit or substandard semiconductor devices getting into a supply chain, especially when due to EOL events, is nothing new. However, OEMs still do not have an easy way to ensure that devices purchased from unauthorised sources are genuine, or that the components have been properly stored and handled. Procurement solution practices that implement a positive philosophy of only procuring devices directly from the original semiconductor manufacturer (OSM), through an authorised distributor, or from an authorised continuing semiconductor manufacturer must be put into place for the semiconductor industry to move forward without the threat of counterfeits.

The lack of proper and consistent testing exacerbates the issue. Testing and inspection protocols must be applied to all devices as a first line of defence. Three main types of testing protocols should be applied, including electrical testing (without short cuts), visual inspection, and destructive physical analysis (DPA). These all focus on authenticity, quality, and consistency. Without the original IP, how can any company other than the OSM accurately and confidently guarantee the authenticity of a device? OEMs and distributors need to rely on OSMs exclusively for this function.

Combining this level of verification, testing, and inspection with a 100 per cent authorised distributor supply chain should solve the problem, right? Apparently not. Customers still buy from questionable sources today. Why? Without proof of direct lineage to the OSM, why would customers, especially small and mid-size OEMs take the risk, when sketchy products ought to be viewed as poison?

One procurement strategy that helps customers achieve this superior level of buying power is something that we call the Constant Initiative. Within the Constant Initiative, OSMs always support and only sell their products through authorised distributors, and don't take key accounts and growth accounts away on a direct basis.

This immediately resolves one problem area: where OEMs will get their products—only from authorised distributors with 100 per cent certified products from the OSM. This also means that a customer can return the product back through the authorised distributor, and the distributor can return the product to the OSM.

This is the only way to maintain 100 per cent control of products throughout the supply chain while maintaining trust and traceability and preserving direct lineage back to the OSM. This will also establish confidence at the OEM level that we as manufacturers will not pull business away from the distributor. In this way we preserve the OEM/distributor relationship, which creates a constant that the supply chain desperately needs.

Jeffrey Simon
  Founder, America Semiconductor