Fake Silicon Sellers Are Making a Killing As Global Chip Shortage Continues

Updated: Aug 21, 2021

Ever since April 2021, Taiwan Semiconductor Manufacturing Company (TSMC) expected chip shortages to last until 2022. But in a recent Wall Street Journal report, the company predicted that more silicon will be supplied to electronics businesses this quarter as it accelerated its auto chip production efforts.

Credit: Donanım Haber

Given the stature of TSMC as the world’s largest contract chip manufacturer, it has a large impact on consumer tech. After all, it services big names such as Apple, Qualcomm and AMD. Automobile businesses are a part of TSMC’s clientele as well.

The reason behind the chip shortage lies in the increase in demand for laptops, TVs, tablets and other devices during the pandemic. Due to quarantine orders forcing people to work, study and relax at home, more consumers have seen the need for gadgets in their everyday lives.

Credit: Jon Sullivan

As semiconductor chips are found in every device imaginable, the low supply of silicon could cause a spike in smartphone prices, according to analyst firm Gartner. The cost of smart TVs already shot up due to the shortage.

For businesses in dire need of chips, their operations will be slowed down due to the scarcity, causing some to unwittingly purchase raw materials from fake chip sellers. As their usual suppliers run out of the integrated circuit, they take a chance on new merchants to their disadvantage.

Authentic Atmel chips (top), Counterfeit chips (bottom) Credit: BotFactory

This is what happened to New York company BotFactory Inc., which produces 3D printers that make electronics. Since the vendors it interacts with could not provide microchips, its staff decided to buy from an unknown seller on the Chinese online e-shopping platform AliExpress.

After receiving the goods, BotFactory lead software engineer Andrew Ippoliti confirmed that they were defective.

Though shady dealers are nothing new, under-reporting chip fraud is commonplace as companies aim to keep their reputation intact by not publicly disclosing the fact that they have been conned. Since businesses avoid pressing charges on deceptive chip traders to save face, bogus suppliers are usually left unpunished.

Luckily, the global information services organisation Electronic Resellers Association International (ERAI) warns professionals in the electronics supply chain field of questionable sellers. Known for providing the world’s biggest database of dubious suppliers and counterfeit parts, ERAI receives complaints nearly every day.

In a blog post dated 8 July 2021, the watchdog’s co-founder and vice president Kristal Snider reported that a seller going by the name of Nick Martin duped many businesses by falsely promising to ship them the electronic components they paid for and leaving buyers up in the air.

Among the websites Martin is connected to are the following:

A-One Parts — www.aoneparts.com

AW Components — www.awcomponents.com

Allen Components — www.allencomponents.com

Bennet Electronics — www.bennetelectronics.com

CDM Distributors — www.cdmdistributors.com

Comstock Components — www.comstockcomponents.com

DC Stock — www.dc-stock.com

Hooper Electronics — www.hooperelectronics.com

Keen Distributors — www.keendistributors.com

Metrix Manager — www.metrixmanager.com

Micro Electronics Tech LLC — www.microelectronicstech.com