Monday, June 18, 2018
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New Pentagon Policy Helps Combat Counterfeit Semiconductors
WASHINGTON, DC — The Semiconductor Industry Association (SIA), representing U.S. leadership in semiconductor manufacturing and design, today applauded a newly finalized Department of Defense (DoD) rule that reduces the risk of counterfeit semiconductor products being used by our military by implementing needed safeguards in the procurement of semiconductors and other electronic parts. The final DoD rule addresses contractor responsibilities for detection and avoidance of counterfeit electronic parts. Among other provisions, the rule implements section 818 of the National Defense Authorization Act (NDAA) for fiscal year 2012, which calls for DoD to utilize trusted suppliers to mitigate the risks of counterfeits.

“Counterfeit semiconductor products can end up in critical consumer, industrial, medical, and military devices, potentially undermining our public safety and national security,” said Brian Toohey, president and CEO, Semiconductor Industry Association. “The new Department of Defense rule will help stem the tide of dangerous counterfeit semiconductor products by mandating that DoD contractors purchase from original manufacturers or authorized sources. This rule represents a long fought victory for the semiconductor industry and a significant step toward ensuring the safety and security of semiconductor products used by our military.”

While the proposed rule issued last year contained numerous issues of concern for the semiconductor industry, the final rule incorporates many improvements called for by SIA in comments filed last year. The final rule requires contractors and their subcontractors to establish a counterfeit electronic part and avoidance system, subject to audit, that includes procedures to show their use of original manufacturers, authorized distributors, or authorized aftermarket distributors prior to turning to other outlets. Additionally, the rule further strengthens flowdown requirements to subcontractors called for by SIA and subjects violators of the requirements within the rule to disapproval of their purchasing system and/or potential withholding of payments by DoD.

SIA has long advocated for measures to stop the dangerous proliferation of counterfeit semiconductor products. Counterfeiters often “harvest” semiconductor components from old circuit boards and then re-mark them to indicate they are new or that they have better performance than the original components. These counterfeit semiconductors, which may be indistinguishable from authentic semiconductors, are then sold through a network of international brokers, posing a risk to critical end products. For more information, see SIA’s anti-counterfeiting whitepaper.

“By working together to implement common sense policies like this DoD rule, we can win the fight against counterfeit semiconductor products and help ensure the safety of technologies that are vital to America's economic and national security,” said Toohey.

About SIA
The Semiconductor Industry Association (SIA) is the voice of the U.S. semiconductor industry, one of America's top export industries and a key driver of America’s economic strength, national security and global competitiveness. Semiconductors – microchips that control all modern electronics – enable the systems and products that we use to work, communicate, travel, entertain, harness energy, treat illness, and make new scientific discoveries. The semiconductor industry directly employs nearly a quarter of a million people in the United States. In 2013, U.S. semiconductor company sales totaled $155 billion, and semiconductors make the global trillion dollar electronics industry possible. Founded in 1977 by five microelectronics pioneers, SIA unites companies that account for 80 percent of America’s semiconductor production. Through this coalition, SIA seeks to strengthen U.S. leadership of semiconductor design and manufacturing by working with Congress, the Administration and other key industry stakeholders to encourage policies and regulations that fuel innovation, propel business and drive international competition.
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