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Shortage of Semiconductors in China Boosts Circulation of Fake Chips

The global shortage of semiconductors has increased the number of fake chips circulating in China. According to Chinese media, the illegal chips come from two channels. One source is electronic waste. The companies remove the evidence from the old chips. Then they clean and repackage them and sell the second-hand chips at a lower price. Others are defects directly from the manufacturers’ production line. Compared to the genuine product, the performance and reliability of the fake chips are usually inadequate.

These chips are mainly used in consumer electronic products. Unlike automobiles and other manufacturing industries, some OEMs (original equipment manufacturers) of consumer electronics do not conduct long-term verification and testing of chips and other supplies.

Counterfeit or refurbished components have always been in circulation, but the situation this year is serious. Originally, the price of a used chip was only 50 percent of the market price, but now the price is rising and is even close to the market price.

China’s electronic components trading hub is almost the world’s largest, with many companies dismantling tens of thousands of e-waste items every day. This provides opportunities for counterfeit chips, which have even found their way to overseas supply chains.

Source: Central News Agency, June 22, 2021