Company Blog

$1 million in counterfeit microchips seized; tip of the iceberg?


June 6, 2011.  
Nearly $1 million dollars of counterfeit microchips have been discovered and seized by federal agents at the Port of Long Beach/Los Angeles, it was announced yesterday.    Agents from U.S. Customs and Border Protection said the chips were hidden inside hundreds of karaoke machines, shipped from China in containers through the port.

The company whose chips were faked,  SanDisk, confirmed to authorities that the chips were not authentic, and they were then destroyed.  It is not known what form of product authentication was used to identify the chips.  That is important, because, depending on the authentication methods,  it may be possible to trace the source or transshipment points for the chips.

The investigation, seizure, and authentication were rapid: the chips are said to have arrived in the port on May 16. 

Anti-counterfeit raids common

As we wrote in our post of March 14, the Long Beach/Los Angeles twin ports are the site of 40% of all seizures of counterfeit goods in the U.S. according to the Los Angeles Times.  Warehouses are routinely raided by the U.S Customs and Border Protection (CBP)...warehouses as big as big box stores, packed with electronics, designer jeans, designer handbags, and acres and acres of cigarettes. (In one raid alone in January, CBP agents seized 22,000 cartons of counterfeit Marlboro Light 100s worth $1.1 million).

Officials from several agencies have concentrated on the Los Angeles port, as the main stop on the counterfeiters’ China Road.  A second counterfeit investigation is being jointly conducted by Homeland Security Investigations (HIS) and Port Police. The Border Enforcement Security Taskforce (BEST), comprised of federal, state and local agencies, also plays a role in the investigation.

Volume of seized counterfeit microchips may be an indicator

But as staggering as the value of some of the seizures may appear, they may be the tip of the iceberg:  About 50,000 cargo containers a day, laden with $1 billion in goods, travel through the Los Angeles/Long Beach ports.  One can only surmise that the shipment of fake microchips announced yesterday may itself be only an indicator of the volume of counterfeit semiconductors moving through the port, typically, the first North American stop for goods from China.

To give an example not connected with the California ports, only a few months ago, in November, 2010, a Florida woman admitted to selling $15.9 million in counterfeit microchips to the U.S. Navy.  Official Certificates of Conformance accompanied the chips.  We do not know if the certificates themselves were counterfeited.