The three Chinese nationals, Daofu Zhang, Jiang Guanghou Yan, and Xianfeng Zuo, were arrested in Milford, Connecticut on December 10, 2015.

The FBI began investigating Yan and a Chinese company known as HK Potential in 2012 for trafficking in counterfeit semiconductors.

“In October 2014 and in March 2015, Yan sold a total of 45 counterfeit Intel microprocessors to an undercover agent who had advised Yan that the components would be used on a U.S. Navy contract involving submarines,” the Department of Justice states in a press release.

The press release further states that, in July 2015, Yan asked the undercover agent if he was able to get him 22 Xilinx semiconductors – military grade – for USD 37'000 each.

When the agent advised Yan that the Xilinx components could be stolen from a U.S. Navy base, Yan offered to provide fake Xilinx components that could be substituted for the stolen components, thus avoiding detection.

He also made it clear that, while the fake components might look real, they were not functioning. In November 2015, Yan shipped eight of the fake Xilinx components to the undercover agent.

All three are now facing charges of violating the International Emergency Economic Powers Act – which carries a maximum penalty of 20 years of prison and a USD 1 million fine – and charges of receiving stolen government property. They are also facing charges relating to trafficking counterfeit goods.

Counterfeit products are indeed a huge problem, which – to everyone's dismay – does not seem to get smaller. Reports of counterfeit components have quadrupled since 2009. But the fact remains that any component can be counterfeited. Everything that can be mounted on a board, will come with that risk attached.

As mentioned above, reports on counterfeit components have skyrocket over the past few years. Whether companies have become more vigilant and rigorous in their reporting, or the problem has indeed taken on rampant qualities remains to be seen.

In a previous interview with Evertiq, Jason Jowers, Director of Quality & Operations for distributor Velocity, said that he believes that testing capabilities have improved and companies are paying more attention when it comes to counterfeit components. And Velocity, with its high-reliability customers within the Military & Aerospace, Medical and Oil & Gas industries, has invested heavily in the capabilities of its three testing facilities, located in Singapore, Austin (Texas) and Amsterdam (The Netherlands).

Jason Jowers says that the key is to set up a reliable selection process for the suppliers you work with, and Velocity inspect every single shipment that comes in, regardless of which supplier it is from.

You have the chance to learn more about this subject and the risks with counterfeit components. Jason Jowers will speak at TEC Gothenburg on January 28, 2016. For registration and more information, please follow this link.