Remarked chips: The continual bane of the PC market

Engineer TK Ong was in the middle of preparing a presentation for a meeting when his brand new PC crashed. It had hung previously each time he used Microsoft PowerPoint and Adobe Illustrator together, but did not bother him much. Perhaps it was just a memory glitch, he thought.

But this time when the Pentium 200MMX-powered PC crashed, he was upset because it resulted in him losing a large amount of data.

He complained to a cousin who had purchased a similar machine and, to his surprise, discovered that the latter's PC was also giving similar problems. Curious, Ong checked with two colleagues who had bought PCs at a computer fair three months earlier. All four PCs--three with Pentium 200MMX processors and one with a Pentium 233MMX processor--were purchased from the same retailer and were crashing without reason.

Determined to locate the cause, Ong ran checks and discovered that the microprocessors in their PCs were remarked. Investigations on the serial numbers of the microprocessors revealed that they were in actual fact Pentium 166 processors. "Being engineers we ran checks on the lot numbers through our contacts in Intel and were told that the numbers were invalid," said Ong.

The group also discovered that the microprocessors were altered and sold as higher-speed processors. "We would have never known if we hadn't investigated ourselves," he added.

Thinking that the matter could be easily resolved, the group contacted the retailer to get the problem rectified. "The retailer kept stalling and eventually avoided all calls," he revealed.

The retailer only relented after Ong and friends went to the local press. But the entire process took the group over a year to resolve.

"We want computer vendors out there to know that they cannot con all the users all the time," said Ong, his quest for justice complete.

The group's predicament apparently is not an isolated one.

Computer vendors and industry observers familiar with the illegal trade are convinced that remarked microprocessors continue to filter into the consumer market in Malaysia.

A computer peripheral distributor who spoke on condition of anonymity said he was once involved in altering speeds on processors. "As long as the practise is lucrative enough, it can be done. I will not put anything past the Taiwanese who are excellent in the field of reverse engineering and are capable of anything," he added.

Sidebar: What Are Remarked Chips?

These are altered chips designed to run faster than the processor manufacturer intended it to run. Chip modification can result in problems with reliability and more. Remarked and overclocked chips can also void the manufacturer's warranty on its processors. However, there is an underground for remarked chips as faster machines mean higher prices.

How to remark

Marking processors is part of the chip manufacturing exercise. A former engineer with a semiconductor company explained that wafers are first sliced up to into individual chips and graded by quality. "The chips are divided into different bins according to its quality. The best quality is normally reserved for high-end customers," he revealed.

After they are cut, these chips are attached to a piece of metal to be bonded, wired, heated and sent for moulding, he added. "Once they are moulded, these chips are marked according to their speeds and serial numbers. Then they are tested again. If they are faulty in anyway, even cosmetically, the processor would be rejected."

The best quality chips end at OEMs such as IBM, Dell, Compaq and Hewlett-Packard which buy processors in bulk.

He pointed out that the excess OEM chips, and chips that don't pass quality requirements end up in the gray market where they are brokered. "These processors normally carry only a one-year warranty and don't come with a fan/heat sinks," he added.

Once they enter the gray market, it would pass through several distribution tiers before ending up at the consumer's hand. "So you can never tell if these processors are new, used, overclocked or remarked as there is no guarantee from Intel," he said.

Typically, "professional" remarkers normally erase the original markings of the rejected processors and mark it to a higher speed. "For instance, a P133 processor can be overclocked to run at a maximum of 166MHz. Some unscrupulous vendors might alter a P133 to P200 or P233," he revealed.

While he reckoned that most of the processors that end up in clone PCs are likely to be remarked, he claimed that the majority do not pose a problem as they are altered within limits.

Intel fights back

The world's largest chipmaker Intel Corp claims that the number of remarked chips floating in the market is very small and declined to disclose figures. "If you look at the totality of the market, most users either buy from well-known branded PC companies or from Genuine Intel Dealers (GIDs). As these users make up the majority of the market, the remainder is relatively small. Of that, we estimate that the number of remarked processor products is relatively few," reasoned Intel Electronics (M) Sdn Bhd country manager Yohani Yusof.

She added that Intel is continually improving its packaging technologies to prevent remarking of its processors. "We do a lot of this but don't divulge technical enhancements as doing so would provide information to the remarkers."

Intel also encouraged consumers to buy their systems from its chain of 750 GIDs nationwide to avoid being duped. "Consumers must be wary and should buy from an authorized reseller and insist on a certificate to verify that it is authentic," she added.

Boxed processors come with a three-year warranty from Intel and are complete with a heat sink, fan and a certificate of authenticity.

However, the four users that were conned had brought their PCs from a GID. The company, ATEC Computer Sales and Services, has since been stripped of its GID status and is now defunct.

Educate the user

One of the largest local component distributors, Microtronica (S) argued that the Pentium III processors are not that easy or cheap to remark as they are boxed as integrated devices.

"Serial numbers are embedded within the processor making it easier to spot the real thing," said managing director Albert Lau, adding that the threat of remarked chips will be further reduced as prices continue to plunge, narrowing the gap between original and fake chips.

But industry watchers are skeptical. They say Intel Celerons that use the Socket 370 slot and the Pentium III 420MHz and 500MHz, although packed in cartridges, can still be remarked.

Managing director KK Tang of local PC dealer Megasoft Computer Services agreed, adding that it is unlikely suppliers, second- and third-tier distributors will check as it takes time and incurs cost. "Perhaps Intel should have a Net service for people to check it out. The idea of consumers being able to check things out may deter some but not all unscrupulous dealers," he pointed out.

Both Tang and Microtronica's Lau also proposed a more aggressive pricing structure which should put the remarkers out of business for a long time.

There is a big gap in Intel's highest frequency CPUs and its predecessors until volume picks up. "Today a Pentium III 550MHz costs RM1,000 more than a Pentium III 500MHz, although the speed differential is only 10 percent," said another dealer. He added that the gap was too tempting for the remarkers to resist.

Last year, CNET US reported an imbalance between the price and supply of Intel microprocessors that led to a rise in the number of remarked chips with bogus speed ratings in Europe and North America.

Three weeks ago, CNET Asia reported that customs officials in Hong Kong had seized HK$6 million worth of remarked CPUs in separate raids on workshops in Kowloon Bay and Cheung Sha Wan. A total of 3,334 remarked CPUs were recovered in the raid which led to the arrest of 17 people.

Intel's Yohani reiterated that Intel's pricing structure was already aggressive enough and that the company was constantly reducing the price gap between different grade CPUs.

The final card, however, lies in the end-user's hand. The majority of computer vendors perceive that the average computer user today is still unable to tell the difference between RAM and CPU. What more CPU speed differentials? "The public must be educated on the issue and they must learn how to make educated choices," said Lau.

Users should familiarize themselves with the packaging, speed, processor, RAM, SIMMs and other aspects related to PC purchasing to avoid being cheated.

Vendors also urged better enforcement by the authorities. "Culprits these days just shrug off the temporary negative publicity and it's business as usual the next day. They should be treated like counterfeiters if they sell remarked chips," said Tang.

For dealers like Tang and Lau who go by the book and sell strictly original goods, it remains an uphill climb. "We have considered leaving the low-end PC market. We can't beat the unscrupulous dealers, but we certainly aren't going to join them. And we're too small to affect the market in any way. Besides, our crying wolf to customers sounds too much like sour grapes," confided Tang.


By Anita Devasahayam, Published in CNET Asia, July 16, 1999