E-waste export controls vital to safeguarding US tech against Russia, China

Lawmakers have expressed concern that China and Russia might have gained limited capabilities in electronically undermining sensitive areas such as communications, defense systems or other critical national infrastructure in the United States. However, there is another closely related and ongoing technology threat emanating primarily from China: counterfeit electronic components. Surprisingly, the mere existence of this constantly growing threat is still largely unknown to most Americans today.

This threat has been steadily increasing over the past 20 years. The scope and risks it posed to the Department of Defense (DOD) and our war fighters were first fully outlined in a 2011 study by the U.S. Senate Armed Services Committee that identified over 1,800 individual cases totaling more than one million suspected counterfeit electronic parts in defense system hardware utilized by our war fighters. Fake parts were found in everything from thermal weapons sights and night-vision goggles to advanced missile systems, aircraft and submarines.

{mosads}I had personally experienced a first-hand look at a small portion of China’s electronics counterfeiting industry during a visit to Shenzhen, China that resulted in an impromptu tour of the nearby city of Shantou. There I witnessed sensitive electronic component parts being harvested from piles of e-waste. I later learned that much of this e-waste might have originated in our country. As the Armed Services Committee report found, “much of the material used to make counterfeit electronic parts is electronic waste, or e-waste, shipped from the United States and the rest of the world to China.” 

Microchips were harvested by heating scrap circuit boards over open flames, then removing the sensitive components with simple hand tools. The parts were then washed in a nearby river or openly dumped on city sidewalks to be rinsed in monsoon rains. In a dingy factory atmosphere where counterfeits were produced, these parts were sanded down to remove the manufacturers’ markings, then re-coated in a process called “blacktopping” to conceal the sanding marks. These previously-used parts were then remarked and misrepresented as new and unused – a large portion of which are deliberately improperly remarked as higher performance or faster speed variations than they actually were when originally manufactured.

Obviously, electronics handled in this way are prone to failure at any time. Keep in mind that microchips are manufactured in ultra-clean environments because even a hair or flake of dandruff can compromise the performance of the hardware it drives. Semiconductor companies test all chips to ensure they will perform properly, with military/aerospace, industrial, automotive and medical grade components (high reliability) subjected to even more rigorous testing to ensure they will function under extreme conditions. The counterfeiting process itself exposes this already questionably functional material to excessive moisture, electro-static-discharge (ESD) and other harsh reprocessing processes.

The U.S. government and private industry have been pushing back on a variety of fronts. Over the past several years Defense Federal Acquisition Regulations (DFARS) have been progressively modified to significantly reduce counterfeit electronics finding their way into military hardware/systems. While emerging counterfeit-detection technologies are improving our ability to identify counterfeits once they are in the supply chain, the counterfeiters’ processes constantly evolve so it is challenging for even a trained eye to detect the better ones without significant testing capabilities. Enforcement also plays a role, with the Department of Justice securing several convictions of individuals and companies knowingly trafficking in counterfeit electronic parts.

All of these efforts are important – but share a shortcoming. They only take aim at counterfeits once they are in the supply chain. We also need to combat counterfeiters by choking off the supply of e-waste that comes from our own homes and businesses. 

Most Americans do not realize the non-functional, older electronic equipment they discard (e-waste) might ultimately be used in the counterfeiting trade. Unfortunately, many unethical e-scrap companies and brokers operating in the U.S. promise responsible recycling within the US but there are powerful economic incentives for them to instead ship these materials to China. It is a lucrative if unscrupulous trade.

We are the only developed country that allows the export of untested, non-working e-waste. Counterfeiters value e-waste from the US because it is relatively high quality – newer, with significant volumes of higher-value advanced components. By even the most conservative estimates, we export nearly 800,000 tons of e-scrap each year. A significant percentage of the components contained in this exported e-scrap will be harvested and resold back into global grey-market electronic distribution supply chains where they will find their way into tens of millions of new products annually.

While U.S. trade laws typically prevent exports that undermine our national security, we continue to allow the unregulated trade in materials that are coming back to undermine our security. Congress must take action by passing the Secure E-waste Export and Recycling Act (HR 917), which would require the domestic recycling of e-waste. The American recycling industry has the capabilities to ensure safe, secure processing of these materials, which will keep them out of the hands of counterfeiters.

SEERA is an important part of a hardline, all-of-the-above approach to fighting back against counterfeiters. Together with new regulations, detection technology and enforcement, SEERA will help ensure we keep counterfeits out of the systems that protect our national security and critical infrastructure.

Tom Sharpe is vice president of SMT Corporation, an electronics distributor to the defense and aerospace industries and counterfeit mitigation laboratory.

The views expressed by contributors are their own and are not the views of The Hill.