WASHINGTON—The counterfeiting of America’s number one export has lead to a precarious national security situation affecting the Department of Defense, experts say.
The House Subcommittee on Oversight, Investigations and Management held a hearing last Thursday, (July 7), to assess how the Department of Homeland Security was handling its myriad tasks. Counterfeit pharmaceuticals and illegal immigration were identified as top priorities for the department to address.
But what alarmed some committee members was the disclosure that almost one of every six spare semiconductors purchased by the Department of Defense are counterfeit.
“It is unacceptable that 15 percent of the military’s semiconductor chips not only are Chinese but are counterfeit,” said Rep. Michael T. McCaul, R- Texas, chairman of the subcommittee.
Semiconductors are small silicon electronic parts used in everything from cell phones and hair dryers to missiles and airplanes. They are the brains of most electronic devices, and vary from motion sensors to laptop processors.
Brian Toohey, the president of the Semiconductor Industry Association, said that most counterfeit semiconductors come from China, although 75 percent of the authentic products are made in the United States. Many, he said, are entering the company through shipping lanes which are under the Department of Homeland Security’s jurisdiction.
“We know this is a problem, we know this is an ongoing issue and it’s affecting the lives of our soldiers and the health and safety of our citizens,” Toohey said.
Counterfeit conductors are made from e-waste, includingolder electronics that have been discarded. Then, according to Toohey’s testimony, the chips are acid washed, surface sanded or otherwise manipulated and relabeled. A counterfeit chip may not have the capability required of it by today’s new technology and is likely to fail – making it, Toohey says, extremely dangerous and a “growing national security threat.”
Some lawmakers criticized the military for buying bogus chips.
“I’ve got a visual in my head of a guy in a trench coat standing over by the Pentagon saying, ‘Hey buddy you wanna buy a chip?’” Rep. Billy Long, R-Mo, said. “How in the world are we buying 15 percent counterfeit chips?”
A 2010 report requested by the Department of Defense three years earlier said that between 2005 and 2008 counterfeit electronics incidents grew by almost 5,500 a year. The department has not yet responded to questions regarding the hearing.
The Department of the Defense has to purchase parts like semiconductors at the lowest available price, which has contributed to part of the problem, Toohey said.
“Part of the solution would be to tighten our federal acquisition regulations,” Toohey said. “It’s a system that we can improve today by making the right kind of policy change.”
Toohey urged Congress to reverse an intellectual property rights policy that prevents customs officials from sending complete photographs of chips suspected to be counterfeit to the manufacturers. Identifying marks in the photographs were deemed to be intellectual property in 2008 by Treasury officials. They must first be removed.
Toohey says the ability for the customs agents to send unaltered photographs to manufacturers is “clearly in the nation’s national security interest” as it will “protect public safety and safeguard the military supply chain” by making counterfeits easier to spot.
Long said sending manufacturers unaltered photos of suspicious products seemed to be common sense, but the “trouble with common sense is it isn’t common.”
No representatives from any government agency were at the hearing. Chairman McCaul said he would invite ICE and other DHS officials in to testify at a later hearing.
