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Global chip shortage leads to record increase in wire frauds: Report

Global chip shortage leads to record increase in wire frauds: Report
Photo Credit: Pixabay
29 Jun, 2022
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The acute shortage of semiconductors after covid-19 outbreak has caused a record increase in wire frauds in 2021 stated Desperate Buyers, a company that tracks counterfeit and fraud in the chip industry.

According to a Reuters report, the ERAI Inc. (Electronic Resellers Association International) said that last year 101 wire fraud cases reported to the US based firm. In 2020 the number was 70 and 17 five years ago.

Firms looking for chips they could not find through authorised distributors were trying to buy them from more dubious brokers and made payments for products which they never received, said ERAI president Mark Snider.

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Snider further said that maximum wired fraud was by chip brokers in China.

The report informs that the current data revealed that the total of counterfeit chip case reported to ERAI in 2021 was 504 and in 2020 it was 463. That is a major drop from 963 in 2019.

China’s pandemic-related shutdowns may make it difficult for counterfeiters to function and also mentioned that counterfeits are getting more sophisticated and capable of escaping detection.

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

It is more probable that the actual numbers were strikingly higher as companies fearful of brand damage would choose not to report acquiring counterfeit chip.

The global semiconductor shortage has affected several industries for almost two years now. Due to this, companies have been either forced to pay more for products or are being having to wait since long. This wait is leading to evident desperation as shown by the report.

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The shortage has largely affected smartphones, personal computers, medical devices, gaming consoles and automobiles among others.