Although fab lines are churning out chips at breakneck rates, and prices on most ICs are falling as a surfeit of silicon impacts the market, there still exist shortages of many part numbers and types of components. The problem of shortages is exacerbated by the fact that many of us (wisely) exercise just-in-time delivery planning in order to cut or even eliminate inventories.

At the same time, because wafer fabrication and packaging assembly lines are frequently sited at far-flung plants in myriad countries, it's not unusual for materials to cross the oceans a few times before completed components arrive at your plant's receiving dock.

Then there's the matter of price. Purchasing officers rarely pay list price for a technology item. Wise purchasing agents negotiate for the best prices, based on availability and anticipated supply and demand. Finding the part that you need at the lowest price translates directly into optimum bottom line profits.

The Stage Is Set

These conditions set the stage for theft and trade in stolen property—especially silicon. In one tech heist a few months ago, millions of dollars worth of Pentium microprocessors—over 5,000 chips—were stolen and transported across state lines (making the theft punishable under U.S. Federal interstate commerce laws).

The culprit, a former employee of the Federal Express shipping company, knew there was a ready market for his stolen chips. Fortunately (unfortunately for him) he was caught, convicted, and sentenced to a lengthy jail term. The judge also extracted more than a million dollars in restitution.

In addition to robbery (some of it armed) of ICs and other parts at vendor locations, hijacking of chip shipments is increasing. For technology highwaymen, stolen components are easy to conceal, and often tough to trace.

Whether theft occurs at a loading dock or during transit, or is an "inside job," there's a thriving gray market for stolen technology components. Some OEMs are eager to buy parts, regardless of their source.

Ripping Off Ideas

Then there's the breed of thieves that go after intellectual property. Some steal disks and tape-outs. Others hack Internet sites with the goal of lifting ideas and source code, or shipping and business plans. No hardware ever exchanges hands.

Look at the recent long-term hack of Microsoft's Web sites and its intranet. Microsoft trade secrets may or may not have been compromised in these forays; Microsoft won't let on.

More recently, the software giant was the focus of denial-of-service (DOS) attacks. Hackers flooded Microsoft's Web sites, preventing users from accessing MSNBC.com and Hotmail.com. Outages lasted as long as several hours; that's a lot of stolen time. Unlike other attacks against the Microsoft citadel, the wave of DOS forays apparently wasn't aimed at intrusion, and neither Microsoft's nor its customer's data was compromised. Microsoft is, however, installing more firewalls—and it launched a $200 million ad campaign touting the reliability of its software.

In any case, these attacks accent the vulnerability of on-line systems and the ease with which they can be penetrated for nefarious or spiteful purposes.

A Kneejerk Response

Can anything be done? At Intel, one response was to add unique Processor Serial Numbers to Pentium III chips. The PSNs could be used to trace chips (and watch for unauthorized over-clocking applications to boot).

Interestingly enough, Intel insists that preventing chip theft or limiting the spread of over-clocking wasn't the intent of the PSN scheme. Instead, says Intel, PSNs would've been used for authentication in e-commerce, attaching a PSN to a person's real-world identity.

Ostensibly, the PSN would identify users, earmarking activities on the Web with user profiles that could be used beneficially for marketing purposes. Intel says that PSNs could limit access to confidential Web sites or chat rooms. Unlike cookies, a hardware-based PSN can't be deleted or changed.

But, privacy advocates put the pressure on Intel, and the world's biggest chipmaker is retreating from PSNs—for now. Intel decided to phase out PSNs in its Willamette silicon.

The PSNs will continue in Pentium IIIs, and it looks like some of Intel's Pentium II and Celeron processors have PSNs too. Though some mobile Pentium IIs with on-board cache are also out there hiding, for the most part, the PSN is a dead issue at Intel.

B2B Larceny and Accountability

But, now that B2B e-commerce is gathering headway as mainstream business, the specter of trading in stolen chips and other electronic components rears its head on the Web. With the rise of the so-called global economy comes a global supply chain. With it comes more Web-transacted international commerce.

How can you determine if the chips you're bargaining for at a Web site's auction block are legitimate devices? Are the technology products you've purchased in the aboveboard distribution pipeline?

Will Web transactions make it easier to launder stolen technology goods? Even if the components you're negotiating for are obtained from a legitimate vendor, how can you be sure they weren't stolen property at some point in the distribution network?

What can you do? What can your company do? Maybe factory-sealed shipments are the answer. Would your shipping and receiving personnel inspect for seals? Should ICs be tagged with on-silicon serial numbers? How about other components?

Maybe the Web itself is the answer. Can Web engines help track chips and other high-tech items as they move from the manufacturer to the OEM? Maybe PSNs aren't such a bad idea after all. What do you think?

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