Counterfeiting: Why Blockchain Is a Solution for the Semiconductor Industry

I remember my first year in the electronic industry. I had been recruited as the manufacturing and logistics director of the Sagemcom set-top-box division. At that time, back in 2008, our growth was steady and shortages were our daily bread. We were putting a lot of pressure on the semiconductor manufacturers to get the components on time. Maybe too much… because once, we received wrong components directly from one of the top semiconductor manufacturer: he had shipped components made by another manufacturer!

How is it possible? At that time, I was not aware how big of an issue this was. We just returned the components… That was my first encounter with semiconductor counterfeiting. Now, I understand the issue better. According to theemiconductor Industry Association, counterfeits cost U.S. semiconductor companies more than $7.5 billion annually in lost revenue. But, more importantly, counterfeit components pose major threats to the health, safety, and security of people worldwide.

Counterfeiting: nothing but a double spend issue

Three years later, I’ve decided to jump into the entrepreneurial world. As a startup co-founder, I try to stay aware, understand the latest technologies, and link those technologies to actual industry issues. Ever heard about blockchain? This is the technology underpinning Bitcoin cryptocurrency. It has been specifically designed to answer the double spend issue. And, really, counterfeiting is nothing but a double spending issue 🙂

Let’s look at how blockchain works, why — in my humble opinion — it is a 100% reliable, robust. and almost free solution to address counterfeiting. Best, it could easily be applied to the electronic component industry.

Blockchain 101

If you know the basics of blockchain, you can just skip the next section. However, since it is not yet used much in our industry, you may be interested ibn hearing how elsewhere before we discuss how it can be applied to our industry.

Bitcoins are virtual coins kept virtual wallets. Every transaction from one wallet to another is written in the blockchain. Blockchain is the technology that allows each transaction to be public (although you don’t know the owner of a wallet) and 100% secured (in short, it’s encrypted and duplicated on so many computers that the IT power requested to hack it does not exist). Bitcoin (BTC) has a concrete value on the market. 1 BTC was equivalent to $2,164.27 US as of this writing.  However, you can make transactions as low as 0.00000001 BTC (around 0.00002 US).