Allegations China hacked electronics hardware could be bigger than the Snowden revelations

If allegations China installed a microchip into the hardware of exported electronics are true, it will be bigger than the Snowden revelations of 2013.

Bloomberg reported for the first time yesterday an investigation that claims China is responsible for installing a ‘spy’ micro-chip into server motherboards sold to US companies.

It would be an almighty hack.



It all began back in 2015, when Amazon began evaluating Elemental Technologies for a potential acquisition. Elemental Technologies made software for compressing video to help stream across the internet. Its technology has been used for the Olympics, communications with the International Space Station, and to send drone footage to the CIA. It was when Amazon hired a third party to investigate Elemental Technologies’ security that some warning bells were triggered – with concerns focussed around the servers installed by customers to handle the compressions.

These servers were assembled by Elemental Technologies by Super Micro Computer Inc, one of the worlds biggest supplier of server motherboards. As Bloomberg puts it: “Nested on the servers’ motherboards, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design.”

“Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. And Elemental was just one of hundreds of Supermicro customers.”

The Bloomberg report also suggests that Apple has been affected, as well as an unnamed major bank, government contractors and several others. Apple catches my eye, because it was a customer of Super Micro Computer Inc, but ended its relationship in 2016.

Why does this matter?

Unlike a software hack, which could be easily resolved through pushing a patch update to affected devices or computers, a hardware hack is permanent.

Whether the Chinese government or other hacking group carried out the alleged hack, it goes way beyond anything seen yet.

If proven true, this would disrupt the trust in Chinese manufacturing for countries such as the United States, where President Donald Trump has repeated calls to being manufacturing jobs ‘back’ from China, Japan and Mexico. He’s pointed his finger at Apple several times, and has even floated the idea of tax incentives if the tech-giant was to move its production to America.

The hack would have a knock on affect in the mistrust of products, as countries in the Western world move away from Chinese products. If the United States in successful in putting pressure on Apple, and other companies, in moving production to its country, would companies in other countries follow suit?

And with the United Kingdom keen to get a trade-deal with America after it leaves the European Union, will Trump start putting pressure on the UK over its own political and trade relationship with China?

The companies told Bloomberg that the allegations are untrue or misinformed, which is no surprise. Read their statements in full here.