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Fake Chips and Real Risks

Posted December 30, 2010 8:30 AM by Steve Melito

Stephanie McCloskey wasn't home for Christmas. She won't be spending New Year's Eve with family or friends either. Last November, the Florida woman was sentenced to five years in prison and fined $250,000 for her role in a $15.8-million chip scandal. Over a three-year period, the former administrator for VisionTech Components sold counterfeit integrated circuits (ICs) to companies that supply the U.S. military. Victims include BAE Systems, Raytheon Missile Systems, and Northrup Grumman.

According to the Department of Justice (DOJ), the fake chips from China and Hong Kong were destined for use in missile components, radiation detectors, and even high-speed trains. Although the Department of Defense (DOD) asserts that the counterfeit ICs did not cause hardware failures or loss or life, the results could have been disastrous. But the DOD isn't in the clear yet. A recent report from the Government Accounting Office (GAO) worries that the Pentagon still lacks adequate processes for spotting fake parts.

Can your company do a better job at identifying counterfeit chips than the U.S. government or its suppliers? What safeguards do you have in place?

Source: PC World

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#1

Re: Fake Chips and Real Risks

12/30/2010 10:33 PM

I would worry that fake chips from China could have a hidden trojan horse that could render the equipment inoperable upon receipt of an activating code, should we ever go to war against them. Not much goes on in China without government approval.

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#2

Re: Fake Chips and Real Risks

12/31/2010 12:52 AM

for 99% of us, the parts would not be a problem, it is only those applications with Life or Limb liability where they are even an issue. The issue is for the most part the testing and radiation hardness of the chip for DoD applications. There is also the issue of undocumented functions on the chips that may make the weapons system vulnerable to sabotage by a foreign power. This is not that likely for older systems that still use LSI and VLSI logic, but newer systems that use system-on-chip and microcontroller technology it is an issue.

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#3

Re: Fake Chips and Real Risks

12/31/2010 1:07 PM

There seems to be something intrinsically wrong when parts of your defence system are made by potential enemies. Or any other country for that matter.

I recall an interesting story about the Israeli air force, when they were flying the French mirage jets, worrying about a possible embargo of spare parts. A company approached Sulzer (maker of the Mirage) and convinced them that they should have all their blueprints and plans recorded on microfilm not paper and won the contract to image all the plans. The original were to be destroyed under strict supervision. Those charged with supervising the plan's destruction followed the trucks to the incinerator and only lost sight of them for a second as the truck passed behind another building. It turns out that an identical truck was waiting behind that building and a load after load of blank paper was burned while the original plans were wisked off to Isreal.

Not sure the story is true but I saw it on TV so it must be true.

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#4
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Re: Fake Chips and Real Risks

12/31/2010 3:29 PM

Sulzer was not the manufacturer of the Mirage, it was Dassault. But yes embargoes are a real problem, especially for microelectronics. Sure we have second sources, but most all of them come from the far east, such as Taiwan and SK. But if the PRC ever decides to invade Taiwan as they have from the beginning, then the availability of those parts is going to be pretty slim pickins. This is one of the many reasons why the military transitioning to COTS parts and systems is such a BAD idea, there needs to be at least one, preferably two, domestic suppliers for every component used on every military system. And unfortunately that means that the government will probably have to subsidize the manufacturing of those parts heavily, with guaranteed buys in exchange for long term availability. It is a strategic national resource that must be maintained for national security. This is one reason why military parts are so expensive. Another is that commercial parts are not tested, designed or packaged for extreme temp., or EMP and radiation hardness. Military semiconductors are. They use special transistor design topologies and manufacturing processes and they are tested to within an inch of their lives for reliability and then they are packaged in special chip packages that withstand high and low temps, high humidity, radiation, EMP, and god only knows what else. All of that means that military parts are not made by the millions, they are made by the hundreds, or thousands at most, so the costs of all that design and testing and packaging has to be amortized over a very short production run which is often idle for 90% of the time. So the next time someone mouths off about 600 dollar toilet seats, just haul off and kick them in the teeth. They aren't worth listening to.

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#5
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Re: Fake Chips and Real Risks

12/31/2010 4:01 PM

Ya that all makes sense as to why the military grade parts are so expensive.

Relating to Sulzer vs Dassault, I did find that sulzer was building the jets under contract for Dassault in this article here.

It was quite a feat stealing a quarter of a million documents weighing over 3 tons.

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#8
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Re: Fake Chips and Real Risks

01/03/2011 4:39 PM

This is one reason why the big political football about the Dems (and the Pentagon) wanting to shut down development of the alternate engine for the JSF is nothing but hot air IMHO. We NEED a second source, if for no other reason than to drive some competitive cost reductions. Being beholden to a single source means that you are at the mercy of their production schedules and pricing policies. And if the caca ever hits the first compressor stage and a shooting war breaks out where we are losing F35's right and left to combat operations, we may need that additional flexibility and production capacity. Yes it comes at a time of excessive budgetary problems, but there are much bigger and lower hanging fruit than this.

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#6

Re: Fake Chips and Real Risks

01/03/2011 4:22 PM

5 years and $250,000??????

IMO, she should be shot as a traitor. And all those who allow foreign sourcing (primary, secondary or even tertiary) of military related components should be relieved of duty.

We are setting ourselves up for major difficulty. IMO, of course.

Hooker

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#7
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Re: Fake Chips and Real Risks

01/03/2011 4:32 PM

Amen brother! Amen.

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