Police in Shenzhen, the technology hub in southern China’s Guangdong province, have smashed a syndicate selling counterfeit imported chips to mainland manufacturers, according to local media, exposing an underground market for high-end semiconductors amid US export controls.
The syndicate’s modus operandi was to collect discarded chips, which were laser-polished and relabelled, and sold as imported products from Infineon Technologies, Texas Instruments and Analog Devices, according to a report last week by domestic online media Rule-of-law China.
Shenzhen police on Thursday confirmed the report, but declined to provide further details.
Members of the group posed as European agents who targeted local manufacturers of car electronics and industrial control systems, according to the report, which also indicated that the fake chips were prone to malfunctions and could pose safety risks.
The syndicate established multiple shell companies that churned out and sold the fake chips in a purported “made-to-order” production model, and had conducted the scam multiple times, the report said.
Public security authorities in Shenzhen’s Nanshan district, which covers the southwest area of the Shenzhen Special Economic Zone, had worked with local market regulators for four months since June before they were able to bust the counterfeit ring and arrest one member, according to the report.
This marked China’s first major criminal case against fake imported chips, the report said. Shenzhen authorities have also established a traceability mechanism with international chipmakers, it added.
