McKeon, McCaul Introduce Bill to Stop Flow of China’s Counterfeit Microchips into U.S.
Chips Pose Risk to Military and Sensitive Computer Networks

WASHINGTON, D.C. – Today Congressman Howard “Buck” McKeon, Chairman of Armed Services and Congressman Michael McCaul (R-TX), Chairman of the Homeland Security Oversight & Investigations Subcommittee, introduced legislation to stop the flow of more than one million counterfeit microchips into the United States, primarily made in China, that pose a risk to our military and sensitive computer networks.

In 2010 alone, the US received more than 2 million counterfeit and mislabeled microchips. Many of these chips were from notorious sources in China, who take e-waste and repackage chips for sale in the United States. These fake chips have ended up in some of our weapon systems and in 2010 over 59,000 of these microchips ended up in military equipment. Additionally, thousands of fake chips have been placed in critical civilian systems and products, like brake systems, defibrillators and home water heaters, that could cause catastrophic failures of these products.

The Department of Homeland Security (DHS) is tasked with identifying counterfeit chips as they cross the border. Customs and Border Protection (CBP) has historically provided semiconductor companies photographs of chips detained at the border so they could determine whether the chips are counterfeit. The photos showed product codes, trace codes, and dates and location of manufacture so the companies could determine whether the chips are genuine. In 2008, the CPB was forced to change its policy due to the implementation of a new Department of Homeland Security policy. Under this DHS policy, CPB could no longer send photos with the relevant information on them, hindering American companies from positively identifying whether a suspected chip is their product or a rogue counterfeit, and thus opened the floodgates for counterfeit chips to flow into our country.

This legislation would reverse the Department of Homeland Security policy and will allow for the CBP to once again provide semiconductor companies with photographs that show the vital information on chips to determine whether they are counterfeit.

“When counterfeit chips make their way into the United States, consumers across the country are put in danger, not to mention the men and women serving our country,” said Congressman McKeon. “From brake systems and defibrillators to advanced military weapon systems, when a product fails because of a counterfeit chip, the consequences can be catastrophic. This bill will fundamentally improve our efforts to stop the dangerous flow of counterfeit chips onto our shores.”

“This flawed policy has opened the floodgates for corrupt microchips to enter the United States,” Congressman McCaul said. “This is a tremendous national security risk to our military and our intelligence networks. The industry has the ability to detect these chips but the government is standing in the way. The policy has to be reversed.”

Last July, Brian Toohey, with the Semiconductor Industry Association (SIA), testified before McCaul’s subcommittee that it is now impossible to make the determination of whether or not a chip is real or counterfeit, and it is easier for counterfeit chips to enter the marketplace.

A recent Senate Armed Services Committee investigation found counterfeit microchips from China in the following:

The Navy’s SH-60B Seahawk helicopter used for anti-submarine warfare, search and rescue, drug interdiction, anti-ship warfare, cargo lift, and special operations. Counterfeit parts were found on a part that compromised the copter’s night-vision system.

C-130 and C-27 cargo planes. Systems that tell pilots of about the aircraft’s performances could have gone blank.

The Navy’s P8-A, long-range anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance aircraft (Boeing 737). Test planes contained a tampered part that never should have been installed.