WASHINGTON -- From November 2007 through May 2010, US Customs officials said they seized 5.6 million bogus chips -- yet many more are finding their way into the US and even the military.

To withstand the rigors of battle, the Defense Department requires the chips it uses to have special features, such as the ability to operate at below freezing temperatures in high-flying planes; because it pays extra for such chips, experts say, the Defense Department has become a prime target for counterfeiters, most of them Chinese companies.

Perhaps nothing illustrates it better than a scheme federal prosecutors recently revealed that stretched from Southern California to Silicon Valley. Mustafa Aljaff and Neil Felahy, a Newport Beach pair indicted in October, have admitted importing from China more than 13,000 bogus chips altered to resemble those from legitimate companies, including local firms Intel, Atmel, Altera and National Semiconductor. Among those buying the chips was the US Navy.

The San Jose Mercury News’s Steve Johnson writes that it was not the first time the military has been hoodwinked. Separate studies this year by the Commerce Department and the Government Accountability Office (GAO) concluded that the US armed forces — which use chips in everything from communications and radar systems to warplanes and missiles — are alarmingly vulnerable to fakes. Commerce officials partly blamed the Iraq and Afghanistan wars for diminishing the supplies of chips the military normally uses for equipment repairs and forcing it to rely on questionable dealers for replacement parts. Moreover, both studies cited serious flaws in the Pentagon’s procedures for spotting sham components (see “Counterfeit chips may hobble advanced weapons,” 30 October 2009 HSNW; and “Operation targeting counterfeit network hardware from China yield convictions, seizures,” 12 May 2010 HSNW). Whether any of the fakes sold by Aljaff and Felahy went into vital defense systems isn’t clear. The Navy declined to comment, saying the case remains under investigation. Nonetheless, recent reports have described several close calls the military has had with bogus chips. Johnson notes that because the microprocessors it needed for its F-15 warplanes’ flight-control computer were no longer made by the chips’ original manufacturer, the military obtained them from a broker, only to discover they were counterfeit, according to the GAO’s study in March. Air Force technicians spotted the bad chips before they were installed on the planes’ computers. That same month, Tobyhanna Army Depot in Pennsylvania discovered it had malfunctioning chips intended for use in military communications systems. “The counterfeit chips failed during testing” and were not put on any equipment, said depot spokesman Anthony Ricchiazzi. In November of last year, a Florida business that makes a device to keep injured pilots from becoming entangled in their parachutes reported finding a counterfeit chip in one of the devices and other fakes in its supply chain. None of the devices were known to to have failed, however.

Johnson writes that it is not just the military that’s at risk. Chips perform key roles in countless commercial products, as well as phone links, banking networks, electronic grids and nuclear power plants. Given the flood of phony chips, said Diganta Das, a University of Maryland expert on the subject, “we can be assured that we have counterfeit parts in all kinds of systems.”

From November 2007 through May 2010, U.S. Customs officials said they seized 5.6 million bogus chips. Yet many more are finding their way into the United States and even the military, which federal officials consider especially worrisome because it could affect national security.

To withstand the rigors of battle, the Defense Department requires the chips it uses to have special features, such as the ability to operate at below freezing temperatures in high-flying planes. Because it pays extra for such chips, experts say, it has become a prime target for counterfeiters.

The Commerce Department turned up 3,868 incidents in 2005 in which the military and its suppliers had encountered counterfeit electronics — the vast majority of chips — with each incident potentially involving thousands of phony circuits. By 2008, the most recent data sought, the number had soared to 9,356.

Counterfeiters — many of them based in China — often tear apart scrapped computers to obtain chips, which they then mislabel to appear suitable for jobs that exceed the parts’ capabilities. Thhis can result in the components suffering dangerous glitches.

Asked whether any military equipment had malfunctioned because of fake chips, Tonya Johnson, a spokeswoman for the Defense Logistics Agency, which buys most of the military’s electronic components, said she knew of no such cases. Besides, she said, her agency “has a series of checks and balances in place to block the flow of nonconforming or counterfeit parts from entering the supply chain.”

Still, the Commerce Department study found fourteen military organizations, including three with the Defense Logistics Agency, that “reported encountering counterfeit parts in some form.”

Johnson notes that Customs used to ask legitimate chipmakers to help it check out suspected parts, but it stopped that two years ago, fearing it could be prosecuted for revealing confidential information about the seller of the parts to another company. Customs officials told Johnsonthey are seeking a legal way to once again get help from chip firms.

The Commerce Department says that other serious roadblocks deter the detection of counterfeits within the military. “It found the armed forces had no reliable method for tracking bogus chips and that numerous attempts to warn military authorities about counterfeits ‘have fallen on deaf ears,” Johnson writes.

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