Record wire fraud cases reported in 2021 due to chip shortages

Record wire fraud cases reported in 2021 due to chip shortages

WASHINGTON D.C - A severe semiconductor shortage has resulted in record wire fraud cases reported by desperate buyers last year, a company that tracks counterfeit and fraud in the chip industry said on Tuesday.

In 2021, ERAI Inc reported 101 wire fraud cases to the U.S. based firm, up from 70 in 2020 and 17 years ago.

Companies looking for chips they couldn't find through authorized and vetted distributors were trying to buy them from shadier brokers and transfer funds for goods that never got delivered, ERAI president Mark Snider said.

He said that reporting is voluntary and most of the wire fraud was carried out by chip brokers in China.

Industry experts say that ERAI is the main database that companies use to find counterfeit chip problems and report fraud because of the government's counterfeit parts database called GIDEP, or Government-Industry Data Exchange Program.

The latest data shows that the number of counterfeit chip incidents reported to ERAI in 2021 was 504 and in. Snider said that China's pandemic-related shutdowns could make it harder for counterfeiters to operate, and that counterfeits are increasingly sophisticated, evading detection.

The data was released at the Symposium on Counterfeit Parts and Materials, organized by the Center for Advanced Life Cycle Engineering, a research facility at the University of Maryland and industry group SMTA.

Diganta Das, the counterfeit researcher who headed the conference said that the ERAI data was a good indication of trends.

The real number was likely to be larger because companies fearing brand damage prefer not to report counterfeit chip purchases.