One of the ways in which illegal wafers are diverted is through the gray market, outside authorized distribution channels, to resellers, brokers or the open market, according to the Semiconductor Industry Association.

(Reuters)

[Financial Channel/Comprehensive Report] The US-based Semiconductor Industry Association (SIA) stated that members of the association do not support or tolerate the use of products for Russian weapon systems, or any other applications that are not designed or licensed for the product.

A SIA statement said that based on recent media reports, some Western semiconductor components were still found in battlefield weapons systems used by Russia, including Iranian-made drones.

These reports address and shed light on the broad challenges of preventing illicit purchases and counterfeit semiconductors.

One of the routes of illicit diversion is through the gray market, outside authorized distribution channels, to dealers, brokers or the open market, the SIA said.

Many of these second-hand and third-hand dealers are not listed companies, and some operate in jurisdictions with less stringent local controls and regulations, creating an environment ripe for the operation of clandestine procurement networks.

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Also, another related challenge is preventing counterfeit products.

Some of the low-end chips found in these weapons were analyzed, determined to be illegal production by counterfeiters, and labeled as genuine.

The ubiquity of chips in a range of consumer products makes controlling them an important issue, SIA said.

Most weapons systems are designed on chips that have multiple civilian uses, the same chips found in cars, laptops and home appliances.

SIA stated that while semiconductor companies take their responsibilities very seriously and develop comprehensive compliance programs, including investigations, audits and supply chain traces, to identify and remove bad actors in the supply chain, these efforts alone cannot prevent deliberate product diversion, Counterfeiting and Abuse.

Many of these challenges go beyond the original wafer producer, with issues including dual-use issues, lifetime of wafer use phases, traceability issues, counterfeiting, and the complexity of the global electronics supply chain.

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