http://www.businessweek.com/magazine/content/08_41/b4103034193886.htm 

By Brian Grow, Chi-Chu Tschang, Cliff Edwards and Brian Burnsed
BusinessWeek
October 2, 2008

The American military faces a growing threat of potentially fatal 
equipment failure - and even foreign espionage - because of counterfeit 
computer components used in warplanes, ships, and communication 
networks. Fake microchips flow from unruly bazaars in rural China to 
dubious kitchen-table brokers in the U.S. and into complex weapons. 
Senior Pentagon officials publicly play down the danger, but government 
documents, as well as interviews with insiders, suggest possible 
connections between phony parts and breakdowns.

In November 2005, a confidential Pentagon-industry program that tracks 
counterfeits issued an alert that "BAE Systems experienced field 
failures," meaning military equipment malfunctions, which the large 
defense contractor traced to

fake microchips. Chips are the tiny electronic circuits found in 
computers and other gear.

The alert from the Government-Industry Data Exchange Program (GIDEP), 
reviewed by BusinessWeek (MHP), said two batches of chips "were never 
shipped" by their supposed manufacturer, Maxim Integrated Products in 
Sunnyvale, Calif. "Maxim considers these parts to be counterfeit," the 
alert states. (In response to BusinessWeek's questions, BAE said the 
alert had referred erroneously to field failures. The company denied 
there were any malfunctions.)

In a separate incident last January, a chip falsely identified as having 
been made by Xicor, now a unit of Intersil in Milpitas, Calif., was 
discovered in the flight computer of an F-15 fighter jet at Robins Air 
Force Base in Warner Robins, Ga. People familiar with the situation say 
technicians were repairing the F-15 at the time. Special Agent Terry 
Mosher of the Air Force Office of Special Investigations confirms that 
the 409th Supply Chain Management Squadron eventually found four 
counterfeit Xicor chips.

[...]


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