Bloomberg Businessweek published an article this week detailing how the Chinese used a tiny microchip to infiltrate American companies. According to this article, this attack by “Chinese spies” managed to reach more than 30 US companies, including Apple Inc.’s and Amazon.com Inc.’s hardware. This was done by compromising the US companies’ supply chain.
According to this article, a top secret investigation that remains open till this day revealed that these microchips – which were smaller than a grain of rice – allowed the “spies” to create a secret doorway into any network that was using machines that incorporated these chips.
The sources that Bloomberg interviewed stated that these chips had been inserted into the machines in factories run by subcontractors in China. According to ex-National Security Agency contractor Edward Snowden, there are two ways in which computer hardware can be tampered with.
One, which is a method favored by the American secret service, is to manipulate equipment while they are in transit. This method is known as interdiction. The second one is done by altering the hardware at the manufacturing state itself.
One country has the advantage on the second method since it makes about 75% of the world’s mobile devices and about 90% of the world’s personal computers. And that country is China.
Being able to insert microchips at the manufacturing stage would be well-nigh impossible, however, that is exactly what American investigators found had been done. These “spy chips” had been inserted into the machines at the manufacturing stage. And one of the main suppliers named was Chinese server company, Super Micro.
According to the news report by CNBC, these claims have been vehemently disputed by the American technology giants. Apple, Amazon and Super Micro all spoke out against the report by Bloomberg.
Apple announced that it did not find any of these “spy chips” that Bloomberg Businessweek mentioned. The company issued a formal statement that there were no vulnerabilities or hardware manipulations found in any of their servers. Apple also stated that the company was disappointed with Bloomberg’s dealings with them.
Super Micro also denied inserting these chips when the hardware was being assembled in China. Perry Hayes, the spokesperson for Super Micro, stated that their company was not aware of any such investigation being conducted.
Amazon.com issued an official statement, referring to Bloomberg’s article. The company stated that its cloud computing division, Amazon Web Services (AWS) had no knowledge of a supply chain being compromised, or that hardware modifications had been made when they were acquiring one of the companies implicated in this article; that company’s name was Elemental.
The Chinese government also issued a statement that the safety of the cyberspace supply chain was a common concern for both countries and that China was also a victim of similar issues.
The Federal Bureau of Investigation (FBI) as well as the Office of the Director of National Intelligence (which represents both the Central Intelligence Agency as well as the National Security Agency) did not comment about this case.
Despite the denials from all the companies, their stocks were negatively affected by the reveal. Super Micro’s share price plunged by 40% after this report was released. Trading of this company’s common stock on the Nasdaq had been halted on August 23, after Super Micro kept missing the Securities and Exchange Commission’s filing deadline. Thus, currently Super Micro stocks are only traded on OTC markets.
The two technology giants did not face such severe consequences though. Apple’s shares fell by 1% on Thursday, while Amazon’s shares took a 1.5% hit in trading.