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Date: 05-06-12

Counterfeit semiconductor parts and China sourcing; a big problem for Infineon India

Leading high-rel semiconductor device vendor Infineon has two major challenges in its India sales office.

This writer recently met Senthil Srinivasan, Director, Industrial and Muti-market Division, Infineon India. He basically takes care of power semiconductor device business in India.The two challenges according to Senthil are:
1. Indian customers prefer to buy sophisticated Infineon's components from China for the advantage of cost.
2. Another bigger problem is counterfeit/fake parts.

Senthil says "what hurts us in India is Indian customers able to get better price in China because they (Chinese distributors) buy in much higher volumes." It may not affect Infineon as a whole but its affects sales revenue of Infineon India. Indians companies not only source devices but also assembled parts from China, as per his inputs.

On the issue of fake parts, Senthil says "The unofficial channels are though becoming a bit of a problem for us, because what happens is that the traders who procure directly from China and HongKong, when the parts are very high in demand, where suppliers are just not able to keep up, through out Asia especially sourcing out of China, we found lot of counterfeit parts. This is a big big problem for us. And that (fake parts) basically ends up coming to India because Indian traders don't take I guess the diligence they need to take by valuating the part authentic or not, they go purely by pricing. And in a situation where you really have high demand and low supply, even big customers some time end up buying from traders because they need the part and they not able to get the part from regular channels. We have cases of large customers coming back to us saying parts are failed. Then we evaluated and said these are not our parts."

Senthil says at the device/chip level, it is almost impossible to identify fake parts by any other embedded secure element means. This issue is more serious in case of power semiconductor devices, because fake parts may work normally in safe spec zone. Duplicate parts look similar only the tolerance for withstanding differs.

On the semiconductor sales network in India, Senthil says there are two kinds of component distributors in India, the big MNC distributors with global presence and local small distributors who give better support to SMEs. Companies such as Infineon works with both type distributors to support volume buyers and small quantity buyers.

However wide is the distributor network, it is difficult to buy advanced (most latest) parts in low volumes in India by paying Rupees. The reason looks to be amount of electronic component business. If the overall semiconductor revenue share of Indian region grows to atleast double digit level, things may improve.

UPS, solar inverters and wind energy are big markets for Infineon India's high power semiconductor devices. Infineon makes both micro/nano silicon devices and also macro-silicon devices such as large size high voltage thyristors and other power switching devices, where a single device is a 5 inch silicon wafer.

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