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Semiconductor Shortage, Counterfeits, Fraud, and More with Dr. Diganta Das

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Engineer, educator, and would be sociologist, Dr. Diganta Das, joined Megan Bergsma and Dr. Bill Cardoso for this Fireside Chat with the Xperts.  As a genuine pioneer in the fight against counterfeit electronic components, Dr. Das weighs in with thoughts on the semiconductor shortage and its knock-on effects of counterfeiting and fraud.

It’s a weighty conversation that includes his unique insights into not only counterfeits, but workforce development, and policy design to address polycrime.   Dr. Das has a refreshing way of making complex issues accessible without diminishing their gravity.  Enjoy this episode, and keep an eye out for more with Dr. Diganta Das.  We are certain to have him back.

Oh, and counterfeits suck!  Learn more about how Creative Electron helps expose counterfeits: read “Don’t Get Duped by the Semiconductor Shortage: 10 tips.” Please reach out with any questions, register for upcoming Fireside Chats with the Xperts and view our archives here.

 

Transcript:

Megan Bergsma:
All right. Welcome to another Fireside Chat, I’m your guest host, Megan Bergsma, and we have our CEO, Dr. Bill Cardoso with us today. And for this Fireside Chat, we’re diving into the supply chain and chip shortage topic featuring another guest speaker onto that topic, Dr. Diganta Das. All right, so Diganta, can you please introduce us to what you do, what company do you work for, any plugs that you want to mention?

Dr. Diganta Das:
Hi, good afternoon, good morning, and no matter anywhere you are watching this. So I’m feeling very much like a multi-term president with the name of your show. I’m with the University of Maryland, but particularly with Center for Advanced Life Cycle engineering. We are a center that started in 1984, an ominous year. But one of the things that you always point out, centers like ours, we started as a NSF center and many, many universities do not stay on for 30 plus years. The reason we are here is because we never dissociated ourselves from the industry. We never tried to go on to become just the people who solve the math problem, just the people who do a simulation. Our input on what we research on, come from the industry. And that is one reason we had been one of the first universities, now there are several, who started working on counterfeit electronics as a real supply chain issue. Not just the issue where it’s like, “Well, that’s kind of below my academic dignity to go and jump into it.”

Dr. Diganta Das:
We found real cases. We found the real reason and we thought it is worth jumping into it with much more rigor, and try to bring in different academic and social disciplines into it. So that’s why we got into this mode. And I also had been doing the symposium with SMTA for 15 years now and Bill had been part of that process most of the time. And that has been annual, one of my yearly time of joy. When in those three days, I learn a lot about the detection of counterfeit issues and particularly the audacious solutions, which sometimes people are suggesting. Making it more interesting and more technology oriented ones. So that’s what I’m coming from in terms of the School of Engineering and our involvement. Things have become a little bit more interesting, when I get the opportunity I’ll probably bring it up, like other scientific community, how they got involved in this discussion.

Dr. Bill Cardoso:
And this conversation is very timely because it was only last week that you organized the event, the counterfeit supply chain management event with SMTA. So you’re fresh, have new ideas and you can share with us right, and very opportunistic of us to be able to talk to you right after, your mind is fresh with new ideas and new concepts.

Dr. Diganta Das:
Sure.

Dr. Bill Cardoso:
Yeah. One of the things that’s been, I’d be very curious about and relates to the uniqueness or the novelty of the current supply chain crisis we’re experiencing, right? We’ve had crisis in the past, we’ve had issues with memory shortage in the past, the economic cycles that boom and bust, that have created supply chain disruptions. And this one feels different, right? What’s your perspective on what looks the same and what feels different from previous disruptions we had?

Dr. Diganta Das:
Well, there are of course many aspects to it and we get to see certain things. And in some cases we develop our opinions based on a little bit of facts, little bit of feelings, and then hopefully a little bit of analytics.

Dr. Bill Cardoso:
Right.

Dr. Diganta Das:
So one of my immediate thought in this particular case was, “Well, it’s just supply and demand issue.” When we are facing shortages and shortages that impacting the lives of everyday people already in terms of prices of certain things. Availability of certain things, from Pelotons to high-end cars, people are getting the fill. My first thought was one, we would see a flood of counterfeit parts.

Dr. Bill Cardoso:
Mm-hmm (affirmative).

Dr. Diganta Das:
That didn’t quite happen. Not that it did not happen, but not in the same scale. I’ve been kind of always tracked what is getting reported in GIDEP databases and the ERAI databases, and Fred Schipp in the SMTA conference, Fred Schipp of the Navy did a good summary of the ERAI data, all of had sort of little bit surprised to find, we do not see, at least in the last 16, 17 months of when we started from the Corona times, a huge increase in the counterfeit part, from numbers. We have seen a big change in the distribution of it. If you recall in 19, sorry, 2018, 2019, we suddenly saw capacitors being counterfeited a lot.

Dr. Bill Cardoso:
Right, the MLCCs.

Dr. Diganta Das:
That has come down. Yeah, that has come down a lot. So the percentage of, ICs this counterfeit has gone up a bit, but it’s nowhere near match with the shortage. So here is my opinion. And one of the ways these counterfeit is happening is no longer just refurbishing, remarking, recycling component. Quite a bit of counterfeiting is happening by making the parts from scratch. For mainly categories of such parts, the expertise, the hardware, the infrastructure exists, and people can churn out those parts. And we often in industry call them clones, I call them illegally manufactured parts.

Dr. Diganta Das:
However, when your shortages are on high-end DSPs and GPUs and microcontrollers, that’s not something one can go back and start making them from scratch, yet. Not easy, not without a huge investment in infrastructure. So nobody’s going to create a new 32 millimeter fab to respond to a shortage issue and make counterfeits. So that may be one reason we are not yet that kind of an upsurge of counterfeiting to take advantage of the shortage. Although we are seeing a different kind of thing, that is cases of outright fraud and in the SMTA conference, Richard Smith of ERAI, he kind of cataloged the numbers of complaints and things that he had been seeing from the distribution supply chain. People are claiming to be sending something, never sending, or lots of wire frauds, the prepayment demands and not delivering the right items and completely different items, just in an error shipment. That’s a different kind of thing. It hurts the industry, it creates problems, but it’s not the same thing as new episodes of counterfeiting.

Dr. Diganta Das:
So, but another thing that’s happening on the side, although that matters for relatively smaller part of the supply chain or demand cycles are really international relations and foreign policy type of thought that okay, we need to dial back on our decades of globalization and try to do things more at home. And in this case more at home being in U.S., of course, similar part might be going on in other parts of the world too. And there are some strong actions being taken sometimes by the U.S. government, even in action, not just policies or thoughts. For example, there was an attempt by a fab in China to buy some latest litho equipment from ASML, which the current administration actually stopped that sale. So it’s not just empty talk, things are happening even in terms of making those distinctions. But we are not in a short term, ready to be just completely making everything at home, even for just a narrow or military purpose equipment. So that’s another piece that’s happening on the side. I welcome the idea that we need to be investing more on industry, high-tech industry in the U.S., and hopefully we succeed, but that’s not going to be solving all of these issues in the next five years.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
The longer term projects, we let things slide in one direction quite a bit. Maybe you have to pull back a little, but without going overboard.

Dr. Bill Cardoso:
Yeah. I think when we discuss reshoring, especially when it relates to microelectronics, that conversation has to be from a generational perspective, right? Because not only we need to discuss the investment in infrastructure, right, with a building, equipment, machinery, we’re talking about education, right? Of a generation of people can develop the technologies and make those things work right. And that’s a workforce that’s, I mean you are in University of Maryland, one of the top schools in the world with the best engineering programs. What’s your perspective, right? Of what it’s going to take to form this competent and a specialized, very specialized workforce?

Dr. Diganta Das:
It’s not easy. I’m not going to sugar coat it, for years, at least in our graduate program, this is anecdotal, this is not a global view. We have been trying pretty hard to recruit students who, domestic students, U.S. students, but we still have to rely on a pretty international body of students. Now I do not see that, of course, I come in from the same background, it’s probably not surprising, I do not see that as a problem. So one of the things I would say is we need to build up the ability to get a lot more people interested in this direction, not just the engineering part of it, but the science, math that goes behind it. But we cannot actually get there by cutting off any sort of political decision that we will not accept students from place X at all. Those kinds of decisions will hurt us, even in short-term, forget long-term.

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
I’m really aware of the kind of thing that people are concerned about regarding some cases, maybe people are coming in with the interest from the very beginning, not really to contribute to the education directly, but to get that technology and move on. There can be other ways to control that, but a blanket kind of decision that we do not want to have an international input into our science and technology education and training, will not help us with the reshoring. Actually, it may even hurt us. Even for the purpose of those students who are coming from different places, we need to, really, it’s a very awkward thing. It’s not the topic I wanted to go. We need to make them feel welcome.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
We need to give them the options of, and rewards for doing the right thing and contributing to the technology. It’s actually, sometimes it’s not the government policy. Sometimes it’s the way private industry reacts so that, all of that will be continued to be need, to be necessary for it. But beyond that, certain things I’m seeing happening in, from high school or other level, I know IPC is trying to do a lot of work on investing from high school level to get students interested in. I’m personally aware of a program, which is so many different companies, particularly Lockheed Martin put together engineering from freshman year in high school program, but people do four years, things can go on. So one of the problems there are, and which is an overall societal issue that we all face. As far as I know, I took a look at, so we mitigated those programs are available only in these upper income suburbs, like where I live in, and not the whole broad area.

Dr. Bill Cardoso:
Yeah, exactly.

Dr. Diganta Das:
Reaching to the students who would have already gone into science and technology without that.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
But we are not expanding the part. We need to be thinking more and going to the places where we can reach people who will be excited, who are not reached right now.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
So we have to get that there to increase our manpower input.

Dr. Bill Cardoso:
That’s absolutely. Now I know you touched about these societal issues and overall engagement. I wanted to bring back to the topic of one of your workshops on Thursday last week, and I’d like you to tell us more about this NSF project you have. The interesting thing about it to me is this bigger picture thinking about counterfeits and how we were talking about poly-crimes, which was a new word for me and how-

Dr. Diganta Das:
It’s new for me too, yeah.

Dr. Bill Cardoso:
Yeah, because I really liked these root cause analyses, right. Really, to try to understand how those things happen and what would you do to actually solve them go forward, right? What would you tell us about this, what do you do for NSF now?

Dr. Diganta Das:
Sp NSF has one group which had been looking at kind of supply chain and the disruption for last several years. And for all this time, it really worked on and funded work on arms smuggling, drugs, human trafficking, and made good contributions to it. However, from two and half years back, I would say first time they kind of came up, “Okay, let’s take a look at, let’s engage some universities to look at the supply chain of counterfeit electronics and see where it all fits in.” So one thing that they said, they did and which was, I really appreciate the thinking of the program managers and agents there. That they kind of made it a point, you guys cannot just put in five engineers in a team and tell us more about how to detect counterfeit parts. We want you to think beyond your comfort zone, involve people in policies, and criminology, and other kinds of trafficking cases and come up with a way of identifying places when a government policy or a company policy can make the most difference.

Dr. Diganta Das:
So what we are doing in our cases, Professor Peter Sandborn and myself, both of us from Engineering. We have Professor Bill Lucyshyn from Public Policy and others from centers within the university who deal more with, in the past terrorism, but also human trafficking, and other sociological issues. So the idea is what incentives or what opportunities work for stopping somebody to engage in criminal activity and move on to more legitimate activity, and taking similar kinds of thought with counterfeit decision. So let’s think of in a simple way in counterfeit related issues, just matter of policies, either as a company policy or as a government policy.

Dr. Bill Cardoso:
Mm-hmm (affirmative).

Dr. Diganta Das:
So all of us at some point have excess inventory, and I’m talking here about legitimate companies who have to-

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
So that excess inventory, if I just say, “Well, I care about who I buy from not who I sell to,” if I just choose to dump them to anybody who would give me the highest dollars, I may be providing raw material for somebody to do counterfeiting on those part. On the other hand, if I take a decision, I’m never going to sell my excess inventory to anybody who looked remotely suspicious, I may have to take a hit. I may have to just junk those parts. Or I may have to sell them to somebody who is going to be paying pennies on the dollar.

Dr. Bill Cardoso:
Right.

Dr. Diganta Das:
Now in that balanced position, what’s the role of the policy makers, should the government create an incentive structure for companies not to dump? Should the companies be saying if certain types of technology, particularly technologies related to security or other issues cannot be sold to certain people? Those are not easy decisions, but particularly in the free market economy. So we believe our network model that we’re creating, it’s called agent-based model, so everybody who has a role to play is an agent. And the idea is, again, talking about free market, each agent behaves independently based on its own cost and profit function.

Dr. Bill Cardoso:
Right.

Dr. Diganta Das:
They may be defining the cost and profit based on certain parameters. Those definitions of cost and profit may come in and change due to government policies or societal policies or adoption of certain standards. So that is where we want to speak today. Okay, if I introduce shortage of a particular type of component or a shipping blockage in a certain part of the world, which connections between the agents kind of becomes the red zone where we can intervene to stop counterfeit products from coming in. And what we are hoping is, particularly with the involvement of other sociologists and criminologists, we’ll find similarities and differences on how maybe on arms trafficking versus component trafficking versus even the worst kind, the human trafficking work, and what tools and methods can be used for all. What can we learn from each other? So we did a workshop, as I said on supply chain and tracking and tracing and even government policies last week. We are doing another one in October, which is specifically on what our sociologist friend in this team called poly-crime, that different types of people may come in together to do different kind of economic activity. I’m calling it economic activity as a, almost as a euphemism, sometimes it’s crime.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
But if we think of giving one example, maybe one criminal gang’s specialty is international borders. And they don’t care what they are crossing with as long as they get paid. Now, if the counterfeit electronics, for example, is coming from a different source, they have to cross a certain border, they may be employing the same kind of people who might have been carrying something else in the previous years.

Dr. Bill Cardoso:
So of what I can tell, poly-crime is nothing but the diversification of your sales channels, right? That’s what we call in the business world. Now, Diganta, how would-

Dr. Diganta Das:
I’m getting excited about it.

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
That we really, sometimes we engineers think, somewhat narrow manner as if we can find the right setting on a CM by which I can find such a defect, that’s the way to go, but that may give me professional satisfaction, but that’s too late.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
That’s too late. If I buy a reel and then take it from reel to reel and have to check every part in an X-ray machine, that’s cool when I find something and not let it go on a board, but it has already traveled.

Dr. Bill Cardoso:
Exactly.

Dr. Diganta Das:
Literally made hops through the supply chain and lot of people have paid for it, a lot of money is wasted. So the if the earlier we can catch, so it’ll.

Dr. Bill Cardoso:
Talk about the many hops of the supply chain, right? I mean, from a regulatory perspective, I mean, one of the ways that governments in the States can play in that cost profit equation that business make on a daily basis is by including fines if bad behavior is executed by a business, right? That’s why it can tip that profit costs. The profitability equation, you can tip it in the other action, and avoid bad behavior by businesses, right? Now in this global ecosystem of parts moving all around the world, the regulatory reach that we’re discussing here is the United States, right? And are you thinking about how perhaps overly punitive to American companies can be while, perhaps the impact’s not going to be as great as if it was done in other countries or in a global perspective. Ideally, if you do this with every company in the world, then you can just solidify this ecosystem, right? And provide the right incentives for everyone, but in a world where you can’t… How this and I’m sure that the people you’re working with, they’ve discussed that for human trafficking and arms smuggling and drugs because they all have the same problem, right?

Dr. Diganta Das:
Mm-hmm (affirmative). So we cannot completely separate, although we can do only what we are doing, but we need to stay on top of what others are doing. If we start with an example, so we have seen the National Geographic documentary on the recycling of electronics, how damaging it is to the environment in different places or we have seen pictures of things happening, particularly at some point in China. One of the difference, we don’t see as much of the recycling electronics issue today is one of the reasons, particularly the two biggest places, both in China and to some extent India, they have moved up in the value supply chain.

Dr. Bill Cardoso:
Mm-hmm (affirmative).

Dr. Diganta Das:
That kind of cheap action of refurbishing and straightening up, retinning of leads. It’s not where they want to be.

Dr. Bill Cardoso:
We’ve seen also that in, you see companies that really go for the bottom line labor moving out of China, moving out on India, right? Because those countries don’t offer.

Dr. Diganta Das:
Are expensive now, yeah.

Dr. Bill Cardoso:
Exactly. They have a growing middle-class, right. And people are moving up so.

Dr. Diganta Das:
That’s one of the places where the policy or economic development position at a different country does impact that. For us, particularly in kind of relationship with this network model we’re thinking about, we were considering, what could will be the impact of number of prosecutions of counterfeit electronics related issues? What will be the impact of types of punishment? What will be the impact… But unfortunately, I can literally count how many, at least openly talked about prosecution have happened for counterfeit electronics in the last 10 years, I can tell you it’s less than 10. There may be other plea bargains which we never came to know about.

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
Now, most companies who are taking part in bad activities will make that judgment on whether or not to take that risk and what kind of components they can take that is sought.

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
Some of the cases that we have heard from, particularly in the symposium, people coming and presenting, had to do with quote unquote, “military semiconductors”, but impact on economy can be for any types of semiconductors. And, but of course for whatever reason the, or actually, we know the reason, that’s where the resources have been put in. Most of the impact had been taken on a few cases of people trying to sell some counterfeit military electronics to military programs, such cases. So just the sheer number of it may not be there yet to make sure that people are saying, “Okay, there will be a consequence if I do.” Now, one of the reasons I say that the NSF did a great job in trying to think of, let’s check this, we cannot run this public policy experiment. We suddenly cannot say, “Okay, DOJ, you go wild, prosecute everybody you have heard about.” We want to see at least in our model, what are the impact that is if, when cost of doing this will be at such a level that it will be less attractive for somebody to do counterfeiting, they might go into a legitimate refurbishing business with the same skillset.

Dr. Bill Cardoso:
Yeah. So it’s all about shifting that the equation, right? That’s the end of.

Dr. Diganta Das:
Shifting the equation now, and we have talked about this many times, that much of the enforcement activity, even for the national IPR Center and all, aren’t for protecting our shoe brands and handbag brands.

Dr. Bill Cardoso:
Yeah.

Dr. Diganta Das:
I have nothing against those, those add a lot of value to our economy. But at the same time, we need to bring the idea of how important the semiconductors issues are, it could be, maybe then we’ll be relation with this whole reshoring business. If we are making things at home, maybe we’ll have more interest in protecting that than what the situation we are on now.

Dr. Bill Cardoso:
Yeah. And I think the automotive plants’ shutdowns and shortage of cars and other equipment has brought to a bigger audience, the importance of semiconductors and the importance of the supply chain in our daily lives, right. But I know we are, and by the way, I had a whole page long of questions to ask you, and I asked you one question, it’s a whole page, so I think we did really well. That’s usually a good sign, when I can go through more than one question that I had. But a question that I’ll often ask or like ask you to as we wrap up here is imagine Diganta, a 20 year old Diganta, right. And now it’s a special 20 year old Diganta because he knows what you know now, what profession, what career would you choose?

Dr. Diganta Das:
Did you notice what we talked about?

Dr. Bill Cardoso:
Yes.

Dr. Diganta Das:
We didn’t talk too much about engineering.

Dr. Bill Cardoso:
Correct.

Dr. Diganta Das:
I would not give up engineering. I learned so much from this trade, but I wish we could keep our way of… That a lot of today’s kids do, they are much more risk takers and thinkers, of an element of a public policy or human history from the beginning so that that’s not something I’m just dabbling into time to time, but take it as part of my profession and keep it as something where I can make more serious contribution in that direction.

Dr. Bill Cardoso:
So it would be Dr. Diganta Das, engineer slash sociologist.

Megan Bergsma:
Exactly, yeah.

Dr. Diganta Das:
Yeah. I wish that I had that risk taking ability to… And that demand that you have made on my time and preparation, at that time, so that some of these things where I’m giving opinion and which I believe an informed opinion, but then I would be more rigorous and knowledgeable. Rather than just based on anecdotes and the information that we come about. That would be one of the things, and I’ll be happy to come back to go through your second page another day, another time.

Dr. Bill Cardoso:
That’s your second question, it’s first page still.

Dr. Diganta Das:
Okay.

Megan Bergsma:
It’ll be a part one of a continued series.

Dr. Bill Cardoso:
Thanks so much.

Dr. Diganta Das:
What you see in my background is our university’s, what’s called quad in most universities, we call the McKeldin Mall. It’s beautiful, but somewhat empty even now, we hope to be back in full scale… We thought from the beginning of fall, but it looks like it be later in the fall when we’ll be placed back in action.

Dr. Bill Cardoso:
Well, stay safe Diganta.

Dr. Diganta Das:
Thanks Megan, thanks Bill.

Megan Bergsma:
Thanks Diganta.

Dr. Bill Cardoso:
Thanks so much for your time.

Dr. Diganta Das:
We’ll talk later.

Dr. Bill Cardoso:
Bye guys.

Megan Bergsma:
Bye.

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