Prevent Counterfeit Electronics: 4 Solutions for IoT Device Makers

According to the Organisation for Economic Cooperation and Development (OECD), counterfeited consumer products represent more than three percent of world trade. Findings show that electronic devices were the fifth most counterfeited products in 2020. In that regard, contract manufacturing carries several inherent counterfeiting risks for consumer IoT device makers. This blog explores the risks of outsourced production and some solutions to protect your smart home products, appliances, medical devices, wearables, and other IoT gadgets against piracy.

The Damages of Consumer Electronics Counterfeiting

The report on counterfeit and pirated goods by the OECD and the EU's Intellectual Property Office (EUIPO) estimates the value of imported fake goods worldwide at USD 509 billion in 2016 – counterfeit electronic goods constituted 12 percent of the total value. Counterfeiting damages original device makers in many ways. Fake sales reduce legitimate IP holders’ profits and increase the costs of repair and maintenance necessitated by defective bogus parts – not to mention the expense associated with trying to identify fakes. The brand value of device makers also takes a hit when fraudsters sell substandard products. If counterfeits enter the supply chain, device maker can face liability issues if the proof of origin of cloned components cannot be proven. Counterfeits can also pose serious safety risks for consumers because they’re not subjected to the same rigorous health, safety, and quality checks as legitimate electronics.

Counterfeit Risks in Contract Manufacturing

The outsourcing of production services has made IoT device manufacturing straightforward. It’s relatively easy for someone with an innovative idea to create a breakthrough product, hire a contract manufacturer, and scale production globally. However, without proper vetting of service providers, the convenience of contract manufacturing can have counterfeiting risks, including:

• Cloning – contract manufacturers can reproduce IoT products illegitimately
• Software can be copied during an outsourced process
• Original hardware components can be replaced with fakes
• Contract manufacturers can overproduce your IoT devices beyond the agreed quota
• Products can be tampered with in the supply chain, exposing intellectual property (IP)

If counterfeiting infiltrates the IoT product lifecycle during manufacturing, it is extremely difficult for consumers to tell the difference between genuine products and fakes. 

4 Ways to Prevent IoT Device Counterfeiting in Outsourced Manufacturing

One of the most critical manufacturing challenges for IoT device makers is protecting IP during the outsourced production process and prevent fraudulent activities. Here are four ways to prevent the most common IoT device counterfeiting attempts when using contract manufacturers:

1. Enable Shipment Tracking for Silicon Parts 

There are many examples of unreliable contract manufacturers overproducing products beyond an agreed quota or using fake components to build products. Assigning your wireless and microcontroller systems on chip (SoC) and modules with unique part numbers allows you to track how many parts your contract manufacturer(s) orders. Should the shipments exceed the agreed production quota, there is a risk of counterfeiting. On the other hand, if the contract manufacturer orders fewer original Silicon Labs’ parts than agreed, you can suspect fake components used in your products. By programming unique part numbers on your Silicon Labs wireless and MCU hardware at our factory, you can track silicon part shipments and reduce your risks of counterfeit in outsourced manufacturing.

2. Protect Software Before Sending to Manufacturing 

Software is vulnerable to copying and cloning during the contract manufacturing process, potentially exposing your IP and making it subject to counterfeiting. So how do you protect software during outsourced production? The only truly secure option requires:

• Pre-flashing a secure bootloader on the wireless and MCU hardware
• Encrypting your software before sending it to contract manufacturers
• Storing custom public and private keys in a secure area on the hardware  

Now your software is protected throughout the outsourced production process, which reduces your risks of IoT device counterfeiting. But how do you streamline this complicated procedure? With Silicon Labs’ Custom Part Manufacturing Service (CPMS), you can securely provision a secure bootloader on the hardware, inject the secure boot public key into one time programmable (OTP) memory, and set the secure boot OTP flag. CPMS allows you to customize wireless and MCU chips securely, quickly, and cost-efficiently, in total confidentiality, at our factories without third parties and massive investments.

3. Set up Tamper Detection 

When your products travel through the winding path of outsourced production and supply chain, they must withstand tampering attempts. Should the products fail to deter tampering, the risk of counterfeiting increases significantly. Silicon Labs’ custom part manufacturing service enables you to set up the right tamper detection features on your wireless and MCU hardware during the silicon manufacturing process. The intuitive CPMS Web portal helps you navigate the anti-tamper settings to protect your products against the most sophisticated tampering attacks and reduce counterfeit risks during outsourced manufacturing and beyond.

4. Assign Your Products with Secure, Unique Identities  

The ultimate method to avoid counterfeiting is assigning your products with a unique identity and enable cloud authentication via a secure server during production and beyond when the user starts using the device. Only devices authenticated with a unique identity can access the ecosystem, which is a powerful way to avoid counterfeits. 

The challenge is how to generate a truly unique product identifier and secure it properly. 

To simplify secure and unique product identifiers for IoT device makers, Silicon Labs offers the Secure Vault solution, which provides a hardware root-of-trust anchor to form a unique product-level identity. The unique product identity is placed securely into Silicon Labs wireless and MCU SoCs and modules. 

This secure identity is the key to perform a secure attestation. Once a product is manufactured with a Secure Vault part with its secure identity from Silicon Labs, it can be authenticated at any time in the life of that product. The production certification chain can be requested remotely from the product and the Silicon Labs Certificate Authority Website. Once that chain is retrieved, it can be used to verify that the device was produced by Silicon Labs validating the authenticity of the device. Using a secure identity offers the highest level of safety to avoid IoT device counterfeiting. 

Remember, this system is not safe until you securely store the Hardware Root of Trust Device Certificate private key on the device. Silicon Labs' Secure Vault High parts provide you with the most secure key storage available on wireless MCUs – it is certified at the highest PSA Certification Level 3. 

With CPMS, you can provision a unique, secure identity on your wireless MCUs at the Silicon Labs factories quickly and cost-efficiently, guaranteeing your products are safe during manufacturing and devices entering your ecosystem are authentic. 

Visit our CPMS page to learn more about secure provisioning, contact Silicon Labs sales directly for detailed product information, or go to the CPMS portal and start customizing your parts.