Murphy's Law: Where The Headlines Live

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October 6,2008:  The latest fabricated military disaster story has to do with Chinese manufacturers producing counterfeits of high-end electronics (using second rate, or counterfeited, parts). The phony parts often have counterfeit labels, and are delivered in counterfeit boxes. Some of these items, like routers or specialty add-on boards for PCs, retail for thousands of dollars each. But because the market for this computer stuff is so large, it's easy for a counterfeiter to get into the supply chain, imply that his fakes are stolen and he's just trying to unload them at half price, and disappear. Same deal with expensive watches, perfumes and clothing. The catch is that some of these phony computer parts end up in U.S. military equipment. That surprises many people, because for decades, military electronics were custom made (and much more expensive than similar civilians stuff.) But in the last decade, the military has been forced to buy civilian. That's because it takes a decade or more to develop a new generation of custom made military electronics gear. In the civilian sector, things move much faster, with new generations coming in two years or less.

The military was forced to adopt civilian electronics, because those nations that did not, would fall hopelessly behind in capabilities. For example, a decade ago, the U.S. Navy began replacing the computers in its nuclear submarines (used to identify sounds picked up by the sonar) with civilian ones. It was obvious back then that the 1980s era computers the navy was using were hopelessly outclassed by what was available to civilians in the late 1990s. So now U.S. subs have civilian computer stuff supporting the sonar, and the sonar gear is much more effective. In addition, the computers are easier to repair, because many of the sailors not only grew up with PCs, but tinkered with them. The computers are much cheaper, and easier to upgrade (which is done as fast as new stuff shows up on the civilian market). Most now use Unix or Linux operating systems as well, to help keep the Internet based exploits at bay,

The U.S. Air Force did the same drill for many of its new aircraft, replacing custom computers with PC stuff. Same with the army and marines. But while the Department of Defense is the largest single PC user (nearly six million of them), it's miniscule in comparison to the total U.S. PC market (less than three percent are military). So the fact that counterfeit Chinese computer parts are flooding the U.S. market doesn't put the military in any particular danger. In fact, the Department of Defense is more demanding about computer components than your average customer, at least when all the rules are followed. But even in the old days, there were cases involving cheap, substandard parts being slipped into those high-priced, custom electronics, so a few more bucks could be made off Uncle Sugar. Screwing the government existed before cheap computers came along.

Normally these counterfeit parts are sold by transitory operations. Eventually, the user has reason to contact the manufacturer of the shoddy part. At that point, the buyer discovers that, say, Cisco, has no router component with the serial number the scammed buyer is reading over the phone. It is then that the buyer realizes they have been screwed. The military tends to check first, although not always. That's where you get the few incidents of counterfeits in military equipment. But this small number of incidents does not a major threat make.

Counterfeit computer parts can be made to very low standards. They will work for a while, but not for the long periods of time that justify the high price of the authentic parts. The Chinese manufacturer sells the counterfeit parts at, say, 20 percent of what a real part would cost, to a foreign distributor. This guy then peddles the counterfeit parts to dealers who may, or may not, know they are getting cheap, but fake, parts at a deep discount. The dealer can then sell the counterfeits at a discount. Discerning buyers can check serial numbers on these high price components (some have a list price of thousands of dollars), but others are more trusting, and get burned.

Counterfeit high-tech items are a growing business, and a growing danger. In addition to computer gear; auto and aircraft components are also being faked. Some aircraft and auto accidents have been traced to the fakes, which makes it a public safety issue. But with the Department of Defense installing counterfeit computer components, it becomes a national security issue. There's also the fear that the Chinese, or some other hostile nation, might get their hands on real computer components, and replace some of the chips with modified ones that will make government networks easier to hack. Yes, it just gets worse. At least in theory. But that's where the headlines live, so get used to it.

 

 


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