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John G. Spooner

Staff Writer, CNET

Advanced Micro Devices is fighting chip fraud.

The chipmaker said that Taiwanese law enforcement authorities on Thursday raided four companies in that country that were suspected of tampering with or selling relabeled AMD processors. Numerous people were arrested, said AMD spokeswoman Catherine Abbinanti, and a number of chips were confiscated.

AMD declined to comment on the number of processors that were seized, their value or how they were obtained by the companies in question, since the investigation is ongoing.

Taiwanese IT daily DigiTimes on Monday reported that Taiwanese police seized about 60,000 AMD chips in a raid on a Taiwanese company and cited reports that said a number of the relabeled chips may already have already been distributed in Europe and Asia.

Abbinanti, however, said that at this time, AMD has no reason to believe that any processors from the company in question made it to Europe.

Because of the high price of some PC processors, individuals sometimes seek to acquire–by theft or other means–lower-performing versions of the chips and doctor and then relabel them, or, in AMD parlance “re-mark” them, as high-performance chips.

AMD’s Sempron, Athlon XP and Athlon 64 PC processors range in price from $61 to $729, and the company’s Athlon 64 FX 55 costs $827.

AMD markets its PC processors under model numbers such as 3500+ or 4000+. The model numbers refer to the chip’s overall performance and are based on several features, including its clock speed and the size of its onboard memory, or cache. Relabelers most often boost the chip’s clock speed, a practice also known as overclocking, which helps them relabel a chip with a higher model number, in turn allowing them to resell the part for a relatively high price to a potentially unsuspecting buyer. Although widely practiced by hobbyists, overclocking can cause chips to become unstable.

Analysts say the practice of relabeling processors is still fairly rare. It’s more likely to occur in times of tight supply, or in so-called emerging markets, where customers might be more price-sensitive and also more lax about whom they buy from.

“It’s really market-dependent,” said Dean McCarron, a principal analyst at Mercury Research. “It’s a lot more common when supply is tight–and we’ve been in a tighter supply environment, especially in the last quarter–and where there’s a sizable spread in product pricing. Typically, it’s pretty minor (in its impact on the market). You wouldn’t find a tier one or tier two (PC maker) buying products from a supplier they had never worked with before.”

With its Athlon chips, AMD relies on varying combinations of clock speeds and cache sizes to reach a given model number, and that in turn could make it easier for relabelers to fool a reseller or consumer by switching around clock speeds, McCarron said.

However, AMD has taken several measures to help its customers identify authentic chips. For one, it affixes each of its processor-in-a-box chips, which are offered to consumers and small PC builders via resellers, with individual serial numbers. It also sticks a three-dimensional hologram logo on each chip’s box.

Furthermore, AMD publishes a list of authorized resellers, which it says customers can check as an additional security measure. The list can be accessed via the chipmaker’s Buyer’s Guide Web site.

The company also actively works with local authorities to investigate relabelers and complaints of relabeled chips.

“AMD takes very seriously any reports of product tampering,” Abbinanti said. “As part of our ongoing efforts to help ensure consumers and businesses are sold only genuine AMD processors, we thoroughly investigate remarking incidents in an effort to determine the source of the altered products, and consider all available legal remedies.”

AMD maintains that the best way to avoid being fooled by a relabeled chip is to purchase that chip from one of AMD’s authorized resellers, she said.

The old “if it’s too good to be true” adage also applies, McCarron said. If one chip or one seller’s price is significantly lower than others’, “it’s usually an indication something’s up.”

Meanwhile, Abbinanti said: “If anyone has any doubt about whether their product is authentic, we encourage them to contact their regional AMD sales office.”

In related news, AMD on Monday released the Alchemy Au1200, a low-power processor designed for personal media players, portable devices that can display content such as DVD movies.