China Hacking Issue | Latest Burning Issues

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BLOOMBERG BOMBSHELL

Bloomberg reported that China had inserted tiny chips into computer equipment manufactured for about 30 US companies, including Apple and Amazon, to steal its technology secrets, citing government and corporate sources.
The report further said that the chips were used in equipment made for various US companies and government agencies.

A REALLY SMALL CHIP

NOTES

The magazine claimed that members of the People’s Liberation Army snuck rice grain-sized microchips onto these key IT infrastructure components during the manufacturing process

BLOOMBERG’S SOURCES?

Bloomberg said its reporting derived from 17 unnamed sources, including “senior Apple insiders” and “senior national security officials.”
Without more transparency, it’s hard to assess the piece’s veracity. While one might wish for greater openness, national security matters of equal gravity often necessitate secrecy.

LET’S UNDERSTAND FROM THE BEGINNING

The story starts with two smaller hardware suppliers: Elemental and Supermicro
Elemental is one of the leading companies in network-level video compression.
It also compresses video communications for the US intelligence services, notably handling the CIA’s drone footage
Elemental compresses videos for its clients by placing its video compression servers on their internal networks. These servers were manufactured a US company called Supermicro.

HOW WERE THE CHIPS PLANTED?

- China is the world’s leading producer in electronics. It has been since US companies began outsourcing manufacturing to the cheaper Chinese market in the 90s. As a result, most of the hardware that goes into running company networks and servers is manufactured in China.
- Supermicro, for its part, outsources its server manufacturing to companies operating in Shanghai and Taiwan.

Bloomberg’s report is based on multiple anonymous sources, which it claims are high-ranking US officials. According to these sources, the CIA had been monitoring an element within the PLA which specialized in hardware attacks

WHEN DID THE MICROCHIP HACK HAPPEN?

When Amazon received the results of the Elemental server security assessment in the “late Spring of 2015”, it alerted the US government immediately, according to Bloomberg.

CAN WE TRUST BLOOMBERG’S REPORT?

The Department of Homeland Security released a statement this weekend supporting Apple and Amazon’s denial of an explosive Bloomberg Businessweek report claiming that a Chinese military unit inserted microchips into Super Micro Computer Inc (Supermicro) server motherboards in widespread use at U.S. companies, saying “at this time we have no reason to doubt the statements from the companies named in the story.”

THE DENIAL

Both Amazon and Apple strongly refute the story. Amazon says it is “untrue” that it knew of “servers containing malicious chips or modifications in data centers based in China,” or that it “worked with the FBI to investigate or provide data about malicious hardware.”
Apple is equally definitive, telling Bloomberg: “On this we can be very clear: Apple has never found malicious chips, ‘hardware manipulations’ or vulnerabilities purposely planted in any server.”

DOES IT MATTER TO YOU?

SIGN OF THE THINGS TO COME?

WHAT U.S VICE PRESIDENT SAID

Mr. Pence accused China of abusing its economic power, stealing American technology, bullying the very American companies that have helped in its economic rise, intimidating its neighbours, militarizing the South China Sea and persecuting religious believers at home.