March 13, 2017, anysilicon
Global information company IHS was recently quoted as confirming that one out of every four counterfeit parts reported last year were for Analog ICs. While the media focus of the counterfeiting problem has been primarily military/aerospace as it relates to national defense and homeland security, the fact is that the majority of the reported incidents were for commercial grade products, says IHS. That should scare you.
Analog ICs were a $47B market in 2011 and generically, analog ICs are pervasive in every major and minor market application. Assessing the impact of a counterfeit device causing a problem is impossible to calculate. It ranges from near zero to OH-MY-GOD!
If my cell phone dies due to a counterfeit LDO losing its mind, well, I’d never know. I’d just replace the phone. Who really cares why it died? If it’s under warrantee, I’m lucky enough to get a replacement. Otherwise, I guess I’m lucky to have an excuse to get a new toy with the latest features… it’s kind of a win-win for me.
While driving to work the other day, I was thinking about my electronic steering and my antiskid braking system and my electronic suspension control system and my engine management computer and all the sensors connected to them. I’m beyond the 36,000 mile, 3 year warrantee and I certainly wouldn’t replace my car if one of these systems failed due to a counterfeit device. I would however, shell out many hundreds if not thousands of dollars to have the vehicle repaired. The thought that the cause may be because someone somewhere along the supply chain decided to cheat the system does not make me a happy camper.
Then my mind wandered to the hospital when my father-in-law lay, attached to multiple pieces of medical equipment that were either dispensing proper doses of medication thru an IV or monitoring his many biological functions…all connected to a central nursing station. The thought of a counterfeit chip related failure there was probably more troublesome for him than me, but still very concerning
Recently my boss flew to India to qualify another supplier. As he left for the airport, I wished him a safe journey and hoped his plane would be counterfeit free. As his eyes glazed over, I realized this is not the proper send-off for.
Counterfeiting is big business for the criminal underworld. No one reports revenue from their criminal activity so we cannot pinpoint an exact figure or the magnitude of the problem. However, Brian Toohey, President of the Semiconductor Industry Association (SIA), when recently testifying before the Senate Armed Services Committee, pegged the figure at $7.5B annually. He cited this as SIA’s estimate of the annual costs to US-based semiconductor companies. What about Samsung, Toshiba, Renesas, ST Microelectronic, Hynix, Sony, NXP and other non US based companies? Could the real number be closer to $15?
Let’s not forget the OEM whose product fails and is faced with massive returns and possibly law suits? Could the real number be doubled again…say, $30B? Whatever it is, it’s big and it’s a big problem across the entire electronics industry.
The story goes that when an infamous bank robber was captured and asked, “Why do you rob banks?” he answered, “Because that’s where the money is.” In other words, it was easy. The same argument holds true for analog IC counterfeiting.
Analog is an easy target, or at least relatively so, compared with other technologies.
So, analog is where the money is. Is it really that simple? Maybe. Consider the gross profit margins posted by the major analog IC companies. The Standard Product Analog IC Profit Leader, for example, had a record year in FY2011, posting a Gross Profit of 78.1%. Remember, this is an average for all products sold over a year period. Half of all their sales had a higher Gross Profit than 78.1%. A counterfeiter desiring to copy and market some of their higher margin products could afford to do so at a cost of three times what the industry leader’s costs are and they would still have a gross profit margin in line with the industry averages. With no costs invested for innovation, it presents a formidable, albeit, unethical and illegal, business model.
If your design uses standard off-the-shelf analog ICs there are some things you can do reduce the chances of encountering a counterfeit device.
Analog ASICs are virtually immune to counterfeiting. With only one source and one customer for each chip, there is no avenue for the counterfeiter to insert himself into the supply chain. It is easy to account for every single device that gets manufactured.
More importantly, reputable analog ASIC suppliers use respected and secure wafer fabrication sources which are physically located in nations that honor and respect the rule of law and protect Intellectual Property. Always insist on knowing where your ASIC silicon is being fabricated.
Previous papers on the subject of Analog centric ASICs have cited the economics of combining multiple off-the-shelf analog functions into a single, low cost chip. If your design uses multiple analog ICs, whether op amps, converters, power management and LDO type products, FETs or more, you owe it to yourself and your company to explore the ASIC option. While analog ASICs are not going to be the ideal solution for every application based purely on economics, you may well be surprised at how cost efficient it really is, even at low volumes. The math is simple; the greater the number of analog functions you integrate, the lower the volume you’ll need to justify it.
The graph below offers a rudimentary analysis of what does and does not make economic sense when considering an analog centric ASIC. Surprisingly, the product’s lifetime volumes needn’t be high, although maximum savings favor higher volumes. The two lines represent approximate Low and High ranges for up-front tooling and NRE charges that might be typically encountered. These include all costs associated with getting the ASIC designed and into production. Other variables can include process variations, such as high voltage or unique packaging requirements.
It’s better to be safe than sorry. Protecting your company from the possible predatory actions of the semiconductor counterfeiters should be of paramount concern. By integrating much of your analog and digital functions into an ASIC, you can protect your product from counterfeit devices and receive a side benefit of lowering your total manufacturing costs.
About the Author
Bob Frostholm is Director of Marketing & Sales at JVD Inc, a Full Service Analog ASIC Company in San Jose, CA. www.jvdinc.com
Bob has held Sales, Marketing and CEO roles at established and startup Analog Semiconductor Companies for more than 35 years. Bob was one of the original marketers behind the ubiquitous 555 timer chip and the first Dolby Noise Reduction IC. After 12 years with Signetics-Phillips, Fairchild and National Semiconductor, he co-founded his first startup in 1984, Scottish based Integrated Power, which was acquired by Seagate in 1987. He subsequently held executive level marketing and sales roles at Sprague Semiconductor (later becoming Allegro), Seeq Technology, and several other startups. Bob is the author of several technical articles and white papers. Email: firstname.lastname@example.org