Chip manufacturers could soon use a new "fingerprinting" technology which can help them thwart counterfeiters who are increasingly targeting chips and electronic components.

In manufacturing industries, especially electronic components, counterfeit goods are a huge problem which causes huge losses that runs into billions of dollars.

Although anti-piracy technology provides a degree of protection, it no longer is an insurmountable obstacle for the counterfeiters.

Now, researchers at the Fraunhofer Institute for Secure Information Technology (SIT) in Germany have developed and anti-counterfeit technique dubbed physical unclonable functions (PUFs) which they say will make chips or electronic components foolproof.

"Every component has a kind of individual fingerprint since small differences inevitably arise between components during production," Dominik Merli, a scientist at Fraunhofer, said in a statement.

According to the scientists, printed circuits develop tiny variations in thickness or length while manufacturing and although the differences don't affect functionality, they can be used to generate a unique and constantly-changing ID code.

A PUF module is integrated directly into a chip - a set up that is feasible not only in a large number of programmable semiconductors known as FPGAs (field programmable gate arrays) but equally in hardware components such as microchips and smartcards.

Unlike conventional cryptographic processes, which can be attacked, the secret key is not stored on the hardware but is regenerated as and when required, said the researchers.

Because the code relates directly to the system properties at any given time, it is virtually impossible to extract and clone the code, marking an improvement on current protection measures, they said.

"Today's commercially available anti-piracy technology provides a degree of protection, but it no longer constitutes an insurmountable obstacle for the product counterfeiters," the Fraunhofer team said.

"Criminals are using scanning electron microscopes, focused ion beams or laser bolts to intercept security keys ? and adopting increasingly sophisticated methods."

Researchers have already developed two prototypes - a butterfly PUF and a ring oscillator PUF. At present, these modules are being optimised for practical applications.

Fraunhofer researchers will present a prototype at the embedded world exhibition and conference in Nuremberg next month.