China's Counterfeit Economy: The Hidden Global Threat

In a desolate, seemingly post-apocalyptic landscape, a Chinese peasant climbs over a rain-soaked mountain of electronic garbage.  He is joined by hundreds of other peasants, scavenging through endless acres of discarded computers, junked telephones, and millions of scrapped consumer electronic devices.  The peasant searches for any electronic components that look undamaged.  Sifting through this vast graveyard of imported American e-waste, he stuffs printed circuit boards into a sack. 

Communist China has graciously accepted our technological trash, made too expensive to dispose of in the US due to the onerous regulations imposed by the EPA (Economic Prevention Agency).

The peasant sits in a dusty clearing and starts a small fire.  He holds a circuit board over the flame until the solder starts to melt.  Quickly rapping the board against a rock, he watches as the precious harvest of integrated circuit (IC) components fall to the ground.  The peasant gathers the ICs and takes them to a small ramshackle factory where he can sell them for a few pennies per dozen.   

Within this makeshift workshop, the ICs are cleaned, and painted with a black epoxy to cover up the original markings.  They are then silkscreened with false information including a consistent date code to make them appear to be from the same manufacturing lot.  Of course, these ICs are severely weakened by the harsh environmental conditions and exposure to Electrostatic Discharge (ESD) through unprotected handling, which is devastating to active electronic components.

The reprocessed ICs are subsequently sold to independent electronic component brokers, who ship them back to the US and sell them at discount prices to largely unsuspecting electronics manufacturers.

Although this is a common method of counterfeiting, many other types of counterfeits are produced as well, primarily in China.  Some ICs are reverse-engineered and manufactured with a copied internal die.  Some of these have been known to include hidden, and occasionally malicious, functions not designed into the genuine component.

Other components, such as resistors and capacitors, are also re-harvested or faked.  Over the past ten years billions of counterfeit ICs, microprocessors, and other components have been sold to private industry throughout the world, including medical equipment manufacturers.  They have also been sold to America's aerospace industry and the US military.

This is a multi-billion-dollar illegal enterprise that has resulted in upwards of $1.2 trillion in lost sales, which has been either ignored or sanctioned by the Communist Chinese government.  It is estimated that all commercial electronic devices such as televisions and cellphones contain more than 8% counterfeit components on average. 

The next time you are on a long transcontinental flight, think about the fact that the US Federal Aviation Authority has estimated that 2% of commercial jetliner electronics are counterfeit.  Actually, if you have aerophobia, perhaps it's best not to think about it.

Just as there is a constant race between the increasing sophistication of computer viruses and anti-virus software, new methods of counterfeit detection are met with technology innovations in counterfeit manufacturing, making fake electronics harder to detect.  It is now becoming nearly impossible to identify many counterfeit ICs without tearing them apart (decapsulation).  Techniques such as X-ray and scanning electron microscopy are increasingly popular.  This naturally results in significantly increased costs for electronic products.

China is a giant mosquito.  Instead of sucking blood and replacing it with a toxin, it sinks its proboscis into America, sucks the jobs and wealth from the country and replaces them with toxic goods.  We have suffered through poisoned Chinese dog food, toxic children's jewelry, and a sea of counterfeit drugs.  Poisoned blood-thinner heparin made in China killed 81 Americans before it was detected.

Are you having continual computer problems?  Do you go through faulty cellphones like beer nuts?  The next time an American F-15 fighter jet mysteriously goes down due to an unknown electronics malfunction, think about how this invisible Chinese invasion may be impacting all of our lives.   

Andrew Thomas blogs at