Chip shortage news: Chip shortage leads to record wire scam reports from desperate buyers

A severe shortage of semiconductors has led to record telegraph fraud cases reported last year by desperate buyers were reported on Tuesday by a company that tracks fakes and fraud in the chip industry.

ERAI Inc said 101 wire fraud cases were reported to the US firm in 2021, up from 70 in 2020 and 17 five years earlier.

According to ERAI president Mark Snyder, companies that looked for chips they couldn’t find through authorized and verified distributors tried to buy them from more suspicious brokers and transferred funds for goods that never arrived.

Reporting is voluntary, he said, and much of the wire fraud was perpetrated by chip brokers in China.

While there is a government-owned counterfeit components database called GIDEP, or the Government-Industry Data Exchange Program, it does not allow anonymous reporting, making ERAI the primary database that companies use to address counterfeit chip issues and report fraud, according to industry experts.

However, the latest data showed that the number of chip counterfeit cases reported by ERAI in 2021 was 504 and 463 in 2020. This is a sharp drop from 963 cases in 2019.

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Snyder said the pandemic-related shutdowns in China could make it harder for counterfeiters to work, and also said counterfeits are getting more sophisticated to evade detection.

The data was made public at a symposium on counterfeit parts and materials organized by the Center for Advanced Life Cycle Engineering, the University of Maryland Research Center and the SMTA industry group.

Diganta Das, a counterfeit researcher who chaired the conference, said the ERAI data is a good indicator of trends.

However, the real number was likely significantly higher, as companies fearful of brand damage often choose not to report counterfeit chip purchases.

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