Severe Chip Bottlenecks Trigger Record Surge In Wire Fraud

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Severe chip shortages have led to a record rise in fraud reported by desperate buyers in 2021.

The ERAI report showed that 101 cases of counterfeit chips fraud were reported to the company in 2021, up from 70 in 2020 and 17 five years ago. Data also showed that the number of counterfeit chips reported to ERAI in 2021 was 504 and 463 in 2020, a sharp decrease from 963 in 2019.

ERAI is the main database used by companies to solve problems with counterfeit chips and report fraud.

According to ERAI president Mark Snider, companies that were looking for chips they could not find through authorized and certified distributors were trying to buy them from shady brokers and transfer money for goods that were never delivered.

Snider said the reporting of cases of chip wire fraud was voluntary and that most of the wire fraud originated from chip brokers in China.

Experts pointed out that the figure is likely to be significantly higher than reported because some companies believe reporting fake chip purchases could damage their brand image.

ERAI’s data was published 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 the industry group SMTA.

The sources for this piece include an article in Reuters.

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