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Submitted by: Bill Hickey
NCVA Listmaster
NRT-0631 Counterfeit chips from China threaten security of critical US systems:
There is a growing threat of counterfeit computer components bought as replacement parts, to be installed into critical systems, including warplanes, ships, and communication networks, according to an investigative report published by BusinessWeek. According to the report, fake microchips are flowing from unregulated bazaars in rural China to dubious brokers in the United States and into military systems. The Pentagon spends about $3.5 billion a year on spare chips, many of them for planes and ships that are 10 or 20 years old.
The report cites government documents, as well as interviews with insiders, that suggest possible connections between fake parts and some breakdowns. According to the report, these fakes could facilitate foreign espionage, as well as critical system failures.
BusinessWeek reports that BAE Systems has uncovered 45 counterfeit incidents over the past three years leading to a BAE policy restricting its purchases to original chipmakers and their approved distributors "except in very limited circumstances." Other defense contractors that have reported counterfeit microchips include Boeing Satellite Systems, Raytheon Missile Systems, Northrop Grumman Navigation Systems, and Lockheed Martin Missile and Fire Control systems.
The report cites an incident in January 2008 where a chip falsely identified as having been made by California‑based Xicor, was discovered in the flight computer of a US Air Force F‑15 fighter jet. An Air Force investigator confirmed that the 409th Supply Chain Management Squadron eventually found four counterfeit Xicor chips.
The report cites Brian Hughitt, a manager of quality assurance for NASA, saying that in the past 18 months NASA inspectors identified two shipments of counterfeit chips during system testing. One lot was installed in flight hardware that was " ... going to be launched into space," Hughitt said, declining to elaborate.
The report cites Robert Ernst, a civilian engineer that heads research into counterfeit parts for the Naval Air Systems Command's Aging Aircraft Program in Patuxent River, Maryland, for an estimate that as many as 15 percent of all the spare and replacement microchips the Pentagon buys are counterfeit. Ernst also assesses that fake parts almost certainly have contributed to serious accidents.
BusinessWeek traced counterfeit military components used in gear made by BAE Systems to traders in Shenzhen, China. The traders typically obtain supplies from recycled‑chip emporiums, such as the Guiyu Electronics Market outside the city of Shantou in southeastern China.
According to the report, workers in back rooms and open yards strip chips from old PC circuit boards. The components are cleaned and then sold from businesses such as Jinlong Electronics Trade Center. Jinlong advertises that it sells "military" circuitry; however, proprietor Lu Weilong admits his wares are counterfeit, according to the report. His employees sand off the markings on used commercial chips and relabel them as military. Everyone in Guiyu does this, he says: "The dates [on the chips] are 100 percent fake, because the products pulled off the computer boards are from the 1980s and 1990s, [while] customers demand products from after 2000."
US Customs and Border Protection officials at US ports have seized eight shipments of counterfeit military‑grade chips purportedly made by Texas Instruments over the past three years, according to the report. Pentagon representatives have met with Texas Instruments and other chipmakers. Major chipmakers blame the Pentagon, particularly its practice of buying from small brokers, for the spread of counterfeit military‑grade chips.
Chuck Mulloy, a spokesman for Intel asserted that "The military is slavishly following the low‑cost paradigm but not following the idea of checking the quality as well."
(BusinessWeek.com, 02OCT08)
Last Modified: Friday, 14-Nov-2008 20:56:39 EST
