Plea Bargain Highlights Danger of Counterfeit Semiconductors

Thursday, Feb 21, 2019, 2:19pm

by Semiconductor Industry Association

Rogelio Vasquez, the owner of an Orange County-based seller of electronic components, pleaded guilty on Jan. 17 to federal charges of selling counterfeit integrated circuits (ICs), some of which were destined for military systems. This case demonstrates the public health and safety threat posed by counterfeit semiconductors. In light of cases like this, U.S. Customs and Border Protection should prioritize the seizure of semiconductor counterfeits and the prosecution of counterfeiters. Agencies should also improve their procurement practices to ensure counterfeits never enter the defense supply chain.

In the plea bargain, Vasquez admitted to importing old, used, and/or discarded ICs from Chinese suppliers that had been altered to appear as if they were new and original equipment manufacturer (OEM) parts. Vasquez then sold these counterfeits to customers in the U.S. as if they were new. Vasquez admitted to selling counterfeit ICs to a defense subcontractor, which then supplied the parts to a prime defense contractor, with the parts ending up in a classified weapons system used by the U.S. Air Force. Vasquez also admitted to selling counterfeit ICs that he believed would be used in the B-1 Lancer Bomber military aircraft.

As SIA emphasized in its anti-counterfeiting whitepaper, counterfeit semiconductors pose major risks to the health, safety, and security of people worldwide. Counterfeit semiconductors have poor reliability and quality. When installed in critical technologies, such as strategic bombers and other weapons systems used by the Air Force, a counterfeit semiconductor failing could have catastrophic consequences.

To respond to this threat, the government should take two specific actions. First, agencies should improve their procurement practices and ensure they only procure semiconductors from the authorized distribution chain. Additionally, U.S. Customs and Border Protection should step up its enforcement and prioritize the seizure of counterfeit semiconductors. Only through comprehensive government action can we ensure that counterfeit semiconductors don’t endanger our public health and safety.