Q3-2018
ERAI, INC QUARTERLY NEWSLETTER
Dear ERAI Members and Colleagues,

"Things are busy" is how most are describing this year’s third quarter. With organizations struggling with electronic component shortages and a prediction for the supply to tighten further into the fourth quarter, demand is above normal in some markets. Adding to the burden for American importers are the Section 301 tariffs imposed by President Trump which tack on a 25% tariff for over 1,000 different harmonized tariff schedule codes for goods whose country of origin is China. Although prices for components have reportedly been steadily increasing, the manufacturing sector maintains that business "remains strong" with high demand forecast to continue into 2019.

This quarter we delve further into the intricacies of the Section 301 tariffs thanks to legal assistance from Keith Gregory and his associates at Snell & Wilmer, LLP. Along with new regulations, several reports have been issued by the US Government addressing the manufacturing base and cybersecurity risks which are described in our White Papers section. Criminal convictions have also been on an upswing with several indictments filed against individuals from China involving the attempted theft of proprietary information, along with other individuals accused of IEEPA violations involving China and Iran.

As always, if you need assistance or have any questions or comments, please don’t hesitate to contact us. The ERAI staff is here to support members and non-subscribers alike and many services that we offer are available to non-subscribers free of charge.

Anne-Liese Heinichen
Editor-in-Chief
anne@erai.com

QUESTIONS AND ANSWERS ABOUT THE RECENTLY IMPOSED TARIFFS

By Keith Gregory, Christina La Barge, and Pacifico Soldati1 Snell & Wilmer, LLP.

Over the past weeks, the United States has decided to impose high tariffs on certain Chinese imports. On July 6, 2018, the United States began collecting an additional tariff of 25% on 818 Chinese goods, including a number of electronic components.2 These new tariffs heavily impact independent distributors of electronic components. This article provides an overview on compliance and lawful avoidance of recent tariffs imposed on capacitors, transistors, and similar electronic components imported from China.

A. DETERMINING THE TARIFF

1. Brief Overview

In the United States, tariffs are based on a three-part process of: 1) classification, 2) valuation, and 3) determination of the country of origin.3 First, an item is classified through the eight-digit tariff line in the U.S. Tariff Schedule, which is harmonized with the tariff schedules of other countries.4 Second, customs officials value the item by looking at its "transaction value," i.e. the price that the importer is paying for the item, not including the cost of the contract of carriage or insurance.5 Most tariffs are imposed ad valorem, i.e., as a percentage of the value of the imported good.6 If the seller and buyer are affiliated entities, then the customs officials look to the transaction values of identical or similar merchandise to determine the value.7 Under the current situation, the United States government has decided to impose a 25% tariff on the selected Chinese goods on top of the existing ad valorem tariff for the good. For example, if a good of Chinese origin had a zero ad valorem tariff before these new rules went into effect, it would now be subject to a 25% ad valorem tariff. If a good of Chinese origin previously had a 10% ad valorem tariff, it would now be subject to a 35% ad valorem tariff, etc. 8

2. Country of Origin

The third and most important consideration under the new tariffs is determining whether a good is of Chinese origin and is therefore subject to the 25% tariff. If an item is entirely grown, produced, or manufactured in one country, that country is the product’s country of origin.9 If an item is produced or manufactured from components or materials from multiple countries, then the United States decides the country of origin by determining where the last “substantial transformation” of the item took place.10 A product is substantially transformed when it is transformed into a new, different article having a distinctive name, character, or use.11 For example, if China imports raw materials or components from another country and “substantially transforms” those raw materials or components into a new product, the product will be considered to be of Chinese origin. In other circumstances, if the United States has a free trade agreement with the country of origin (such as Mexico or Canada under NAFTA), then it is necessary to check for any different or additional rules of origin requirements for items being imported into the United States from that country.12

3. Tariff Collection

The new tariffs will be collected in the same way that tariffs have previously been collected. The importer is liable for payment of the tariff at the time when the entry of the goods into the United States is filed with the U.S. Customs and Border Protection. When the items are received at a U.S. port of entry, the tariffs will be collected by the Customs and Border Protection agents as part of the process of clearing the goods for entry into the United States.13

B. ALTERNATE IMPORT SCENARIOS

1. Scenario One: A Chinese product is purchased by a client’s Hong Kong subsidiary, which then ships it to the United States.

Under the rules of origin, a product manufactured or produced in China is considered a Chinese product. If the Hong Kong subsidiary purchases the Chinese product, it will still be considered a Chinese product unless the subsidiary substantially transforms it into a new and different article in Hong Kong so that it would be considered a Hong Kong product. If the Hong Kong subsidiary simply purchases and ships the Chinese product, it will still be considered a Chinese product and will be subject to the additional 25% tariff.

2. Scenario Two: A product is manufactured in Malaysia or other non-Chinese country and is purchased by the client’s Hong Kong subsidiary, which then ships it to the United States.

As in Scenario One, the country in which the product is manufactured or produced would be the product’s country of origin. If the Hong Kong subsidiary purchases a product manufactured in Malaysia, the product would still be considered a Malaysian product after purchase by the subsidiary unless the subsidiary substantially transforms it. It would not become a Chinese product and would not be subject to the tariffs on products of Chinese origin. Depending on the country of origin of the product, it would be necessary to check whether that country has a free trade agreement with the United States.14 If so, then there might be different or additional rules of origin that might be applicable.

3. Scenario Three: A Chinese product is shipped through the US for delivery to a previously identified buyer outside of the United States.

Depending on the specific circumstances, the Chinese product would not be subject to U.S. tariffs if it is merely passing through the United States on its way to its final destination. A tariff does not have to be paid on a product in each country through which the product passes on its way from the seller to the buyer. Tariffs are only imposed when the good reaches the country where the ultimate purchaser resides.15 For example, if the Chinese product passes through the United States on its way to the ultimate purchaser in Mexico, and Mexico imposes a 2% ad valorem tariff on that category of Chinese product, then the buyer would have to pay the 2% Mexican tariff but not the additional 25% U.S. tariff. If the Chinese product is imported by an American company which has the intention of later reselling the product to a buyer outside of the United States, then the product would be subject to the U.S. tariff because the importer would be considered the ultimate purchaser upon import to the United States.

C. ADDITIONAL ISSUES

1. How is the tariff assessed given variable cost of goods?

Under the General Agreement on Tariffs and Trade (GATT), all WTO member countries abide by the same valuation methods. For U.S. Customs, the preferred method of valuation is the previously mentioned “transaction value” method, which is the “price paid or payable for the goods at the time of export to the U.S.”16 Of course, the U.S. government could also move to implement specific, compound, revenue, prohibitive, or protective tariffs, which would change the analysis depending on the specific circumstances of the new tariffs.

As it stands now, all of the proposed tariffs on Chinese goods are ad valorem tariffs meaning they are taxed solely based on the goods’ net worth, and a percentage of that worth. Therefore the cost of goods is immaterial to the tariff process as only the price paid or payable for the goods at the time of export matters.

For example, if a U.S. importer purchases two separate foreign goods for $20 and $50 respectively, under a 10% ad valorem tariff, then the latter would have a $5 tariff while the former would only have a $2 tariff applied upon importation. The cost of goods sold for the seller is immaterial as only the transaction value matters, unless a specific rate is otherwise authorized. So the US government doesn’t care if it cost the foreign supplier $1 or $15 to produce the product only that it is selling for $20 or $50.

If an independent distributor pays a Chinese supplier $5 for a part at the time of export to the U.S., then tariffs will be assessed on the $5 regardless of what the independent distributor sells the product for in the U.S. because they paid $5 for the product at the time of export to the U.S.

In the end, the transaction value will rule over market value or other measures, so as to not penalize the victims of situations like the one mentioned here.

2. How are multinational entities affected by these tariffs?

The Section 301 duties currently only apply to products of China, and are based on country of origin, not country of export. In order to determine country of origin, courts apply the aforementioned substantial transformation test, which applies unless it is superseded by a special statutory test in a free trade area.17 This is a subjective test that looks to whether a product is substantially transformed into a new and different article having a distinctive name, character, and use.18

For example, if a red Chinese car is shipped to Brazil and painted blue, no substantial transformation has taken place, so the country of origin is still China and upon importing the car to the US it would be subject to these Section 301 tariffs (provided the class/type of car is on the tariff schedule).

On the other hand, if a Chinese tire company ships four tires to Brazil and they are put on a car and the car is subsequently imported to the US then it will not be subject to these tariffs because the car is of Brazilian origin as a substantial transformation of the tire took place.

When engaging in intra-firm trade, multinational companies should use transfer prices to report the transaction values to U.S. Customs and Border Protection, which looks at transportation costs to the U.S., customs duties, fixed costs of importer’s U.S. operations, and importer’s profits from anticipated resale prices in the U.S. of the merchandise sold by the Importer to the U.S. customers after importation.

Transfer pricing is not mentioned anywhere in the over 200 pages of the Office of the US Trade Representative’s “Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974.” Nor was transfer pricing mentioned by U.S. Trade Representative Robert Lighthizer in his July 2018 statement on a Section 301 action. Transfer pricing was also not addressed in the Office of the US Trade Representative’s “Request for Comments Concerning Proposed Modification of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation.”

Therefore, the lack of any mention of transfer pricing in these documents signals a continuation of current rules subjecting intra-firm transfers to tariff actions.

3. Will the government be producing a list of commodities and harmonized codes affected by the retaliation tariffs and will specific companies be targeted?

The U.S. Government has produced the following request for comments and notice of public hearing, which includes a schedule of all imported products that will be subject to the tariffs: https://ustr.gov/sites/default/files/301/2018-0026 China FRN 7-10-2018_0.pdf. In addition, the Chinese government has released its own list of tariff codes for their retaliatory tariffs against U.S. products.19

Under Section 301(c)(3) of the Trade Act of 1974, “The actions the Trade Representative is authorized to take under subsection (a) or (b) may be taken against any goods or economic sector – (A) on a nondiscriminatory basis or solely against the foreign country described in such subsection, and (B) without regard to whether or not such goods or economic sector were involved in the act, policy, or practice that is the subject of the action.” In general the U.S. Government does not take tariff actions towards particular companies as Section 301’s focus is on the actions of foreign governments, so at this point any products on the schedule will be subject to the tariff regardless of company of origin.

D. CONCLUSION

Although the government has imposed high tariffs on products of Chinese origin, the system for determining and imposing tariffs has not been altered. If importers wish to lawfully avoid paying the tariffs, they will have to consider importing non-Chinese goods from China or elsewhere, or look to the substantial transformation test to see if goods or materials from China can be substantially transformed into the desired item elsewhere.



1 Keith Gregory is a partner at Snell & Wilmer, while Christina LaBarge is a third year law student at Loyola Law School and Pacifico Soldati is obtaining his joint JD/MBA at the University of California, Irvine.
2 Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, Docket No. USTR-2018-0005 (April 2018) [hereinafter “Notice of Determination”].
3 Daniel C.K. Chow & Thomas J. Schoenbaum, International Business Transactions: Problems, Cases and Materials 134 (3rd ed. 2015).
4 Id.
5 Id. at 134-35.
6 Id.
7 Id. at 141.
8 Notice of Determination, supra note 1, at 7.
9 Id.
10 Id. at 141-142.
11 Id. at 142.
12 Id.
13 Importing into the United States: A Guide for Commercial Importers, U.S. Customs and Border Protection (2006), https://www.cbp.gov/sites/default/files/documents/Importing into the U.S.pdf.
14 The United States has free trade agreements with 20 countries: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore. Free Trade Agreements, Office of the United States Trade Representative https://ustr.gov/trade-agreements/free-trade-agreements.
15 Chow & Schoenbaum, supra note 2, at 134.
16 “Notice of Revocation of a Ruling Letter HQ 547654 Relating to Post-Importation Adjustments; Transfer Pricing; Related Party Transactions; Reconciliation.” U.S. Customs and Border Protection.
17 Chow & Schoenbaum, supra note 2, at 134.
18 Id at 134-35.
19 We procured the Chinese government’s tariff announcement and the two accompanying Tariff Schedules. We translated them into English and can make them available upon request. Given the length of the Tariff Schedules we elected not to include them as an Appendix herein.





About Snell & Wilmer, LLP:

Founded in 1938, Snell & Wilmer is a full-service business law firm with more than 400 lawyers practicing in 12 locations throughout the United States and in Mexico. The firm represents clients ranging from large, publicly traded corporations to small businesses, individuals and entrepreneurs. Snell & Wilmer and its lawyers have been recognized by clients and peers for exceptional legal skills and ethical business practices with various distinguished awards. Corporate Board Member magazine recognized Snell & Wilmer as the number one law firm to work with in Phoenix for 12 consecutive years; and the firm was named a "Go-To Law Firm®" as reported in Corporate Counsel®, a national magazine for general counsel. Snell & Wilmer is renowned for having extensive experience in a full range of transactional and litigation legal services. The firm’s range of practices include, among others: bankruptcy, bioscience, business litigation, construction, corporate, employee benefits, energy/environmental, healthcare, intellectual property, international, labor/employment, product liability, real estate/zoning, tax, and trusts/estates. For more information, please visit: http://www.swlaw.com/.


Summary of Chinese Import Section 301 Tariffs


As a response to China’s “unfair” trade practices related to the transfer of American intellectual property and technology, a 25% tariff went into effect on July 6, 2018 for selected Chinese imports. The tariff covers 818 product types, as defined by their corresponding Harmonized Tariff Schedule (“HTS”) codes, manufactured in China and imported into the United States. The list can be viewed at:

https://ustr.gov/sites/default/files/enforcement/301Investigations/List%201.pdf

Second tranche:
On August 7, the United States Trade Representative (USTR) released the next list of an estimated $16 billion worth of items imported from China to also be subjected to a 25% tariff. This second round of Section 301 tariffs is in addition to the list released on July 6. The list contains 279 out of the original proposed 284 product types that were proposed on June 15. CBP began collecting the duties on these items on August 23, 2018. The list can be viewed at:

https://ustr.gov/sites/default/files/enforcement/301Investigations/Final%20Second%20Tranche.pdf

Third tranche:
On September 21, 2018, the USTR released a list of approximately $200 billion worth of Chinese imports to be subject to additional tariffs starting September 24. These imports will initially be subjected to a 10% tariff; however, the tariff will increase to 25% starting January 1, 2019. The list contains 5,745 lines. The final list can be viewed at:

https://ustr.gov/sites/default/files/enforcement/301Investigations/Tariff%20List-09.17.18.pdf





2019 NDAA Highlights


On August 13, 2018, President Trump authorized the 2019 National Defense Authorization Act, or NDAA, which provides a budget of $717 billion for U.S. national defense. The bill specifies the annual budget for the U.S. Department of Defense and lists expenditures which must first be approved by Congress and executed by the President.

The 2019 NDAA allows for troop pay raises, the purchase of 77 F-35 stealth jets, delays the delivery of stealth fighter aircraft and missile systems to Turkey, allots $140 million to the Missile Defense Agency for development of critical directed energy and space sensing projects and hypersonic defense, and strengthens the government’s efforts in a long-term strategic competition with China. With regard to China, within two years, the NDAA requires a report from the Secretary of Commerce to Congress and the Committee on Foreign Investment in the United States which details foreign direct investment transactions made by China in the United States with analysis of the patterns of investments that align with the objectives of the Made in China 2025 directive.

A few notable points relative to the electronics industry are:

Section 843 Pilot program to test machine-vision technologies to determine the authenticity and security of microelectronic parts in weapons systems:

Section 843 authorized the Defense Microelectronics Activity, or DMEA, to coordinate with the Undersecretary of Defense for Research and Engineering to establish a pilot program to “test the feasibility and reliability of using machine-vision technologies to determine the authenticity and security of microelectronic parts in weapon systems.” The bill permits for consultation with manufacturers, industry associations, Department of Defense OEM suppliers, federal laboratories, and manufacturers of machine vision companies to determine the effectiveness and readiness of the technologies as well as hindrances that limit counterfeit mitigation by the DoD. The pilot program must be established by April 1, 2019 and must terminate by December 31, 2020.

Section 845 Report on defense electronics industrial base:

By January 31, 2019, the Secretary of Defense is required to submit to Congress a report analyzing the “health of the defense electronics industrial base, including analog and passive electronic parts, substrates, printed boards, assemblies, connectors, cabling, and related areas, both domestically and within the national technology and industrial base.” The report requires: an examination of current and planned partnerships with the commercial industry; analysis of the current and future defense electronics industrial base; threat assessment related to system security; assessment of the health of the engineering and production workforce; description of the electronics supply chain requirements of defense systems integral to meeting the goals of the 2018 National Defense Strategy, recommended actions to address areas deemed deficient or vulnerable, and a plan to formalize long-term resourcing for the Executive Agent; and any other areas matters determined relevant by the Secretary.

Section 1261 United States strategy on China:

Section 1261, while not directly related to electronic components, establishes that “long-term strategic competition with China is a principal priority for the United States.” The act calls for a “whole-of-government strategy” involving diplomacy, economics, intelligence, law enforcement and military elements to strengthen national security. Specifically, the strategy should address, among other points, the use of economic tools to gain access to sensitive United States industries and malicious cyber activities.

Section 1653 Study and report on reserve component cyber civil support teams:

Section 1653 requires a study on the feasibility and advisability of the creation of reserve component cyber civil support teams for each State. The teams would be able to respond to attacks, natural disasters or other large-scale incidents that affect computer networks, electronics and cyber capabilities. The report would address how the “Cyber Mission Force” would interact with other Departments, as well as federal, state and private sectors.

Section 1765 Annual report to Congress:

Section 1765 requires an annual report reviewing: the effect of controls imposed on exports, reexports and in-country transfers of items addressing threats to national security; the impacts of such controls on the scientific and technological leadership of the United States; efforts to provide exporters with compliance assistance; summary of export enforcement actions; summary of approved license applications; and summary of industrial base assessments conducted during the previous year by the Department of Commerce, including with respect to counterfeit electronics, foundational technologies, and other research and analysis of critical technologies and industrial capabilities of key defense-related sectors.

Read the 2019 National Defense Authorization Act


Q: WHO CAN REPORT PARTS TO ERAI?
A: ANYONE. Membership to ERAI is not required.


We have made the process as simple as possible by offering two ways to report parts:

1. Report a part online at: http://www.erai.com/SubmitHighRiskPart
2. Or even simpler, email your report to reportparts@erai.com


We require: 1) the part information, manufacturer, part number, date code, lot code; 2) a text description of the non-conformance or findings and; 3) digital images that support the findings.

Ideally, you can send all archived data you have and make reporting future cases routine by including a report to ERAI in your existing inspection process.

Please note that you can report parts anonymously. We will not include your company name on an alert. You do not have to report the supplier that shipped you counterfeit devices unless you choose to. The major benefit to the industry at large is knowing there is a suspect counterfeit part out there.



U.S. Government Charges Individuals for Assisting Foreign Governments

“The export of sensitive technology items to China or anywhere else in the world is tightly regulated for good reason. One of HSI’s top enforcement priorities is preventing U.S. military products and sensitive technology from falling into the hands of those who might seek to harm America or its interests. We will continue to work closely with its law enforcement partners to aggressively target and investigate those who jeopardize our nation’s security – or the welfare of those devoted to protecting it.”

Joseph Macias, Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles


Yanjun Xu

On October 9, 2018, Yanjun Xu, aka Qu Hui aka Zhang Hui, was extradited from Belgium and arrested and charged with conspiring and attempting to commit economic espionage and steal trade secrets from several US aviation companies, including GE Aviation. Xu is a Deputy Division Director with the Chinese Ministry of State Security’s (MSS) Jiangsu State Security Department, Sixth Bureau, an intelligence and security agency of the Chinese government responsible for counter-intelligence, foreign intelligence and political security. This is the first time a Chinese intelligence spy is deported to the United States for criminal charges.

According to the indictment, from December 2013 through April of 2018, Xu targeted US aviation companies’ employees by offering them the opportunity to travel to China to deliver a presentation at a university and/or “exchange” ideas. Xu paid the travel costs and provided stipends. In actuality, the presentations were made for the benefit of the Chinese government. Also under this guise, Xu received proprietary information in the form of presentations. Xu then tried to pressure employees into providing further details by asking questions which would involve victim companies’ commercial secrets.

Xu’s arrest is linked to the arrest of Ji Chaoqun, accused of passing information about eight Americans to MSS for possible recruitment.

Xu faces a maximum penalty of 15 years’ imprisonment for the charge of conspiracy and attempt to commit economic espionage and 10 years’ imprisonment on the charge of conspiracy and attempt to commit theft of trade secrets.


Si Chen

On October 1, 2018, Si Chen, a Chinese citizen who pleaded guilty in July on federal charges of conspiring to illegally export sensitive space communications technology to China, was sentenced to serve 46 months in a federal prison. Si Chen, also known as Cathy Chen, Celia Chen, Ceclia Chen and Chunping Ji, operated Archangel Systems Space, Inc. (ASSI) based in El Monte, California with additional addresses in Pomona, Gardenia, and Walnut, California and Shenzhen, China.

Chen was accused of violating the International Emergency Economic Powers Act (IEEPA) by purchasing and smuggling microwave components, traveling wave tube amplifiers, low noise amplifiers, and digital to analog converters, all having space communications applications, to China without the required licenses from March 2013 through the end of 2015. The products were purchased by Chen’s California company, Archangel Systems Space, and were sent to addresses in Hong Kong used by Century Electronic International Co., Ltd. (CEI) of Shenzhen, China, Star Aero Investment Limited of Shenzhen, China and TAA Electronics, Inc. of Hong Kong, China. In addition, Chen and her unnamed co-conspirators falsified shipping documents to conceal the value, description, end-user and country destination of the shipments. Funds for payments of the illegally exported products were received through an account held by a family member at a Chinese bank.

Chen’s father allegedly has ties to Beijing’s military affairs and in 2012 she married a Chinese man who was hired by an American information technology company after omitting he was a graduate of a communist military training school1. Federal prosecutors contended that her actions posed “a grave and palpable threat to the national security of the United States.”

Chen pleaded guilty to conspiracy to violate the IEEPA, money laundering and using a forged passport issued by the People’s Republic of China with her photo but a different name. Chen has been in federal custody since her arrest in May 2017 having been deemed a significant flight risk.

Johnny Paul Tourino

On August 22, 2018, the United States Attorney’s Office, Central District of California announced that Johnny Paul Tourino, owner of Spectra Equipment, Inc registered in Laguna Niguel, CA, was accused of violating the International Emergency Economic Powers Act (IEEPA), conspiracy, smuggling goods out of the United States and money laundering.

The indictment alleges that between January 2014 through July of 2017, Tourino and two other unnamed individuals procured and shipped computer servers to Iran without obtaining the necessary licenses from the U.S. Government. Tourino allegedly told the manufacturer that the servers were destined for Kuwait and Slovenia, despite knowing they were procured for Bank Mellat, an Iranian bank. The servers are considered dual-use commercial goods and are controlled by the Commerce Control List due to national security and terrorism concerns.

If convicted of all charges, Tourino faces a maximum sentence of 430 years’ imprisonment and fines of up to $13.25 million. His trial is scheduled for March 5, 2019.


Ji Chaoqun

Ji Chaoqun, a Chinese citizen and United States Army reservist, was arrested on September 25, 2018 for violating the Foreign Agents Registration Act (FARA) by acting as an illegal agent for the Republic of China. Ji initially arrived in the United States under an F1 student visa to study electrical engineering at the Illinois Institute of Technology in Chicago, Illinois. After graduating in 2015, Ji then enlisted in the U.S. Army reserves in 2016 under the Military Accessions Vital to the National Interest (MAVNI) program which permits the military to “recruit certain legal aliens whose skills are considered vital to the national interest”2 in an effort to qualify for American citizenship. During his application to the MAVNI program, Ji denied having had contact with foreign intelligence officials.

In October 2017, an investigation in Ohio uncovered emails that showed a suspected intelligence agent directing a US-based engineer employed at an aircraft engine defense contractor to provide technical information for the Chinese government. In subsequent uncovered communications related to the investigation, a high-level intelligence officer of Jiangsu Province Ministry of State Security asked Ji to purchase train tickets. According to the complaint, the mailing address of the tickets was for the location of the Ministry of State Security where Ji’s handlers were based.

Ji was subsequently asked to purchase background checks on eight naturalized American citizens born in Taiwan and China that had worked in or retired from jobs in science and technology, including several who specialized in the aerospace industry and seven individuals who had worked for defense contractors, for possible recruitment. Ji paid for online background checks for the individuals using Internet sites such as Spokeo, Intelius and Instant Checkmate. Ji’s handler was subsequently arrested around April 2018.

In April, Ji met with an undercover FBI agent who told Ji that he was asked by a Ministry of State Security intelligence officer to meet with Ji in light of his handler’s arrest. In a subsequent meeting, Ji admitted to the undercover agent that he knew that individuals he had met were Chinese intelligence officers.

Ji faces a maximum sentence of ten years’ imprisonment if found guilty.


Eliyahu Cohen

An extradition request by the U.S. Government for an Israeli accused of arranging for the export of several defense articles, including U.S.-origin Hawk Missile System components, to Iran has been stalled. Eliyahu Cohen aka Eli Cohen DBA Wheels, Inc., Q.P.S. Ltd., P.A.D Ltd., and R.S.P Spare Parts Ltd. was identified as a co-conspirator and indicted on federal felony charges of conspiracy to export U.S. defense articles, unlawful export of U.S. defense articles, and conspiracy to commit money laundering in 2014.

In 2016 the Israeli Supreme Court had rejected an appeal by Cohen stating that he should be handed to U.S. authorities, “in order to stand trial for the commission of federal offences of trading military spare parts with Iran.”3 However, Cohen’s lawyer told a U.S. court in June of 2018 that Cohen is “too ill to fly” and is “incapable of making an international flight without a relatively high risk of death” and thus cannot be extradited from Israel. Cohen had requested attendance of a plea hearing through video link from his residence in Bnei Brak.4

It is alleged that between 2000 and 2004, Cohen and his alleged accomplice, Avihai Weinstein, exported military-grade spare parts for missiles, fighter aircraft and armored troop carriers without the necessary licenses. On two occasions fighter jet parts were re-exported from Israel to Greece and on to Iran.

If convicted, Cohen could face up to 20 years in prison and a $1 million fine for breaking laws prohibiting the sale of arms to Iran.


Ghobad Ghasempour

On August 20, 2018, Ghobad Ghasempour, a Canadian citizen, was sentenced by the U.S. court to serve a 42-month prison term for conspiracy to export U.S. goods to Iran. Ghasempour pleaded guilty in April of 2018 to using front companies in China to export restricted products to Iran.

Ghasempour allegedly worked with Yi Xiong, who is located in China, on an elaborate scheme dating back to 2011 where they and their co-conspirators would lie to U.S. manufacturers to purchase restricted use products ultimately destined for Iran by claiming instead the items were bound for customers in Portugal and Turkey and by falsifying shipping documents. Monies were easily transferred through Chinese bank accounts avoiding financial difficulties due to sanctions. Among the items being illegally exported were a microscopic tape measure that could be used in missiles, a test table used to test gyroscopes’ accuracies for use in airplanes and thermal imaging cameras used in military drones.

At the sentencing hearing, the judge stated that Ghasempour was solely motivated by greed and money and that the exports were destined for “the Department of Defense for Iran – the very group that would be the most harmful to the United States.”5


Xiaolang Zhang

Xiaolang Zhang, a former member of Apple’s autonomous car research team, was arrested at San Jose International Airport preparing to board a flight for China in July 2018 for allegedly stealing trade secrets from Apple.

Zhang initially joined Apple in late 2015 as an engineer and worked on the company’s self-driving car project. In April, he went on paternity leave and traveled to China with his family. Towards the end of his leave, he visited Apple and met with coworkers, reviewed their latest work and stole a computer keyboard, cables and a large box. He also transferred information to his wife’s laptop before quitting his job citing a move back to China. Instead Zhang began employment at XMotors, a subsidiary of Xiaopeng Motors, a Chinese car company.

After Zhang left Apple, technicians noticed an exponential spike in downloads of company documents on his account that occurred prior to his departure and notified the FBI. The downloads included engineering schematics and technical reports. According to the indictment, Zhang admitted to stealing Apple’s trade secrets to federal investigators in an interview a week before his arrest.

Zhang faces up to 10 years’ imprisonment and a $250,000 fine if convicted.



1https://www.ocweekly.com/chinese-communist-spy-stealing-u-s-military-technology-pleads-guilty-in-oc/
2https://www.justice.gov/opa/pr/chinese-national-arrested-allegedly-acting-within-united-states-illegal-agent-people-s
3https://www.timesofisrael.com/israeli-to-be-extradited-to-us-over-sale-of-military-parts-to-iran/
4https://www.i24news.tv/en/news/international/americas/178551-180702-israeli-wanted-in-us-over-alleged-iran-military-sales-...
5https://www.justice.gov/opa/pr/canadian-sentenced-3-years-prison-conspiracy-export-restricted-goods-and-technology-iran


Identifying a Fraudulent Request for Quote

By: Mary Dunham

How many times have you received an unsolicited email from what appears to be a legitimate company requesting quotes for goods your company provides? How much time have your employees wasted, checking availability and pricing, arranging to fulfill an order, getting credit approval, etc., only to learn that the RFQ or Purchase Order is fraudulent? Below are tips to help your organization recognize these fraudulent solicitations sooner.

Examples of recent ERAI alerts:

Example 1:

On August 23, 2018, an organization received an unsolicited Request for Quote allegedly from the University of Colorado Boulder seeking price for the below items on Net 30 payment terms: 
  • 100 boxes Telpix CB-C5E-A 1000ft CAT5e UTP Cable
  • 100 boxes Yemax CB-C6-C Premium 4 Pair 1000ft CAT6 UL Listed 99% Copper
  • 100 boxes Telpix CB-CP-GN10-95S-B 1000ft RG59+18/2 Split Type Cable – Black
The organization recognized this as a fraudulent request and did not respond.

The phone number, 720-340-5554, is a non-fixed VoIP line with a Colorado area code.  Calls are answered by a recording stating the person is unavailable and to leave a message and someone would return the call.

The website, www.cu-edu.net, is not accessible. The website domain was created on July 21, 2018 and updated on August 20, 2018 allegedly by:

Micheal Faber
1366 Red Hill Ave, Apt C
Santa Rosa, CA  95404
Phone: 842-452-0012
Email: hhmdassociate@gmail.com

A search of Google and WhitePages.com shows no match for the address or phone number.  Calls to the phone ring with a rapid busy signal.

Example 2:

On February 19, 2018, an organization received an email allegedly from Durbin Global Sourcing requesting quotes for items listed on an attachment. The email requested best and reasonable rates in the form of a proforma invoice and technical details or e-catalogue/brochure urgently. The organization did not respond or open the attachment.

ERAI scanned the attachment and discovered it contained an executable (.exe) file.

Durbin PLC verified that this was a scam. Although the email used a valid domain name of @durbin.co.uk, internationalsales@durbin.co.uk is invalid. The correct international sales contact for Durbin is intsales@DurbinGlobal.com.

What to look for:
  • Was the email/fax RFQ unsolicited?
  • Have you posted the requested goods recently in a part search database?
  • Before responding, always check the email address. Go to the actual website for the company and see if the email address matches the actual company’s domain name. Perform a “who is” search for the domain name and note the creation date.
  • Check the phone numbers against the actual website.
  • Can you reach the contact by phone or are they VoIP lines and you have to leave a message or only communicate via email?
  • Check the wording and structure of the request: are there misspellings, grammar and other errors?
  • Are the products for which a quote is being requested products which can be sold easily, such as hard drives, processors, ink cartridges, Garmin products, etc?
  • Many times, these requests are coming from corporate officers who do not usually solicit bids. Is it likely you would receive requests from a director, etc.?
  • Be wary of requests from universities and educational institutions if you do not routinely sell to these types of organizations.
  • Remember, if something seems too good to be true, it probably is.

Many of these emails have several things in common, such as:

  • contain misspellings, improper grammar, awkward sentence structure and are, in general, poorly written;
  • the email or URL are not authentic to the company;
  • a location other than the company’s main address is requested for shipping;
  • an offer to provide credit documentation is made so that net payment terms can be obtained;
  • attachments may be provided, which include the organization’s logo and signatures that look legitimate.

Please note: Prior to opening any attachments from someone you don’t know, check with your IT person to determine that it is safe to open. These attachments can be used both to infect your computer with malicious software but also to direct you to areas where personal information is requested.

Best practices:
  • Don’t download or try to open any files that you did not directly request from a trusted source.
  • Specifically, if you didn’t request a quote for a product or service or do not normally transact with the organization, don’t click on any attachments or links.
  • Make sure your firewall is turned on along with anti-virus and anti-malware protection – and that they are up to date. Anti-exploit software may also provide additional protection.1.



1https://www.bbb.org/northern-alabama/news-events/business-tips/2017/02/businesses-targeted-by-fake-email-quote/


Advanced MP Technology Acquired by America II


On September 18, 2018, America II, a Wynnchurch Capital, LLC company, announced the acquisition of Advanced MP Technology, Inc. The acquisition by America II, one of the industry’s largest distributors, raises the value of the two companies to an estimated $427 million in revenue.1

Founded in 1989, America II is an electronic component distributor stocking over one billion components throughout North America, Europe and Asia. Mike Galinski, CEO of America II, stated, “we are very excited about combining 70+ years of industry knowledge, expertise and resources of two leading global distribution organizations into one powerful platform.”



1https://epsnews.com/2018/09/19/america-ii-advanced-mp-buy/


Attorney Scam Affects Electronics Industry

By: Terry Lively

Cybercrime in the electronics industry has many different faces. While identity theft is rampant throughout the supply chain, ERAI has been alerted of instances involving companies who appear to be chosen as “defendants” in fake lawsuits. Many times the intended victims are legal entities; however, examples involving electronics companies have been reported.

The Scam:
In general, the scammer or “client” is typically a foreign organization. The “client” will reach out to a US-based law firm seeking legal assistance for a variety of different reasons such as debt collection, legal disputes, etc. The “client” will go as far as signing a retainer agreement and will likely present “evidence” of a legal issue.

The “client” will then advise the attorney that the matter has been settled and a check is being sent by the defendant or opposing party. The attorney is instructed to deduct any legal fees from the check amount and wire the balance to the “client.”

When the check is received, the attorney will comply with the instructions, deduct their fee and wire the balance to the “client.” The attorney is later advised by their bank that the check is fraudulent. By the time this is realized, the “client” has already received the funds and the money is unable to be retrieved.

In many instances the fictitious client may create a website, business listing and even a Dun & Bradstreet profile seemingly in an effort to validate their “company” if the attorney researches the “client.” The purported “opposing party” in the fraudulent lawsuit seems to be chosen at random and is often times a legitimate company.

Industry Examples:
1) On April 10, 2015, an attorney in Dallas, Texas was approached by a Japanese company calling itself Renesas Electronics for assistance in finalizing a joint venture with a Texas entity, Abacus Industries. The attorney believed he was interacting with the widely-known Japanese semiconductor manufacturer Renesas Electronics (www.renesas.com). After an initial email communication, the attorney was provided with a "Confidential Letter of Intent" allegedly signed by the CEO of Renesas, which outlined a business deal with Abacus Industries. Over the next three weeks, the attorney was instructed by Renesas’ Sales Manager, “Tsuneo Takahasi", that he would receive partial payments required by Abacus Industries and that he was to deposit the funds and wire the money to their agent. The attorney received what appeared to be two authentic checks by overnight mail from: Larry Horns, 161 Bayt St., Ste. 3700, Toronto, ON M5J2S1, Canada:





A memo was included with the checks requesting notification be issued upon receipt. The names of the individuals to be notified were Paul Jackson (paul.jackson@dr.com) and Larry Horns (larry.horns@dr.com). According to the attorney, checks totaling $1,585,000.00 were received. $5,000.00 was to be kept by the firm as an initial retainer for legal services; $1,125,000.00 was wired by the firm to the following bank accounts:

Bank Name: THE BANK OF FUKUOKA, LTD
Swift Code: FKBKJPJT
Branch Name: HEAD OFFICE
Bank Address: 2-13-1 Tenjin Chuo-ku Fukuoka-city Fukoka Japan 810-8727
Bank Telephone NO: 81-92-723-2131
Account NO: 1695186
Beneficiary Name: HANEYA Co. Ltd
Beneficiary Address: 7-11 Komondo-machi Hakata-Ku Fukuoka-city, Fukuoka, Japan

Bank Name: Hang Seng Bank Limited
Bank Address: 83 Des Voeux Road Central, Hong Kong
Bank Code: 024
Account No: 364 352203 883
Swift Code: HASEHKHH
CHIPS No: 010522
Beneficiary Name: DEVELOP INTERNATIONAL BUSINESS CO, LIMITED
Beneficiary Address: Unit E228, 3/F., Wing Tat Commercial Building, 97 Bonham Strand
East, Sheung Wan, Hong Kong

On May 4, 2015 the attorney was notified by his bank that his trust account had been placed on "hold"; the previously deposited checks had been drawn on a closed account. A call to the issuing bank, Banque Royale du Canada in Montreal, QC, revealed the attorney was the victim of a scam.

2) More recently, a Member organization, located in New York, was contacted by a local attorney who advised them of a recent email they received from a company located in China by the name of:

Lengjer Metal & Plastic Co Ltd
No 2 Xianfeng Road 188 Industry Area Ping-Shan Admnistration Division
Tang Xia Zhen Dongguan Guangdong, China
+852-2407-6765

Lengjer Metal & Plastic Co Ltd and their aforementioned address in Guangdong, China (including the misspelling of “Administration”) appear on various online platforms such as hktdc.com (Hong Kong Trade Development Council) and hoovers.com (D&B Hoovers). However, a formal website or corporate documents are unable to be found. The phone number provided by the “client” is a Hong Kong phone number as opposed to a Guangdong, China phone number and does not appear to be associated with Lengjer Metal & Plastic Co Ltd found online.

The scammer allegedly provided the attorney with a Letter of Intent, asked the attorney to advise the individual of the retainer fee, and requested a retainer agreement. The attorney advised the named target company of this communication and opted to not respond to the scammer.

The Member, who was named as the “target company”, states they have never conducted business of any kind with a company by the name of Lengjer Metal & Plastic Co Ltd and is unaware how the company/individual obtained their company information.

Victims of this scam can report their experience to ERAI at www.erai.com and the IC3 (Internet Crime Complaint Center), a division of the FBI. IC3 can be reached via their website at https://www.ic3.gov/default.aspx.



Additional reading:

Jux Law Firm
https://jux.law/scams-targeting-attorneys/#How_You_Can_Help_Stop_this_Scam

Texas Bar Blog
https://blog.texasbar.com/2018/01/articles/law-firms-and-legal-departments/scams-continue-to-target-texas-attorneys/




New InterCEPT Class Launching Soon


Launching soon – InterCEPT Class TM-04: Counterfeit Inspection and Testing of Electronic Parts: Surface Testing and Criteria for Acceptance or Rejection

This class will provide an in-depth discussion of surface testing associated with detecting counterfeit electronic parts. It will reference both the IDEA 1010B standard and the SAE AS6171 requirements for surface inspection. The class includes video footage and images from a test lab to help the student understand how surface testing is performed. Device images will be reviewed so that the student can recognize the criteria for acceptance and rejection.

The course covers:
  • Surface testing - tests for remarking and resurfacing
    • Equipment needed, equipment costs
    • How to perform the tests including on-site
    • video and step-by-step instructions
    • Criteria for acceptance
    • Criteria for rejection
  • Content of test reports
  • Training considerations
  • Outsourcing surface testing

Students completing the class will:
  • Understand the terminology for tests for remarking and resurfacing.
  • Understand how to perform the tests.
  • Understand the criteria for acceptance and rejection.
  • Understand the general format of the test report for surface testing.
  • Assess additional considerations including equipment needed, equipment cost, training and outsourcing options.

The class is best suited for individuals with quality, inspection and testing, purchasing, and sales responsibilities. Students taking TM-04 are expected to have a working knowledge of what a counterfeit part is and where counterfeit parts come from. If you do not have sufficient background knowledge, InterCEPT recommends completion of CF-01: A Historical Overview of Counterfeit Electronic Part Activity: The Risk, Response, and Solution.

This class will be added shortly to InterCEPT’s class offerings addressing the detection of counterfeit electronic components.





New InterCEPT Class Launched


InterCEPT has launched a new class to supplement your organization’s incoming visual inspection training requirements. The class features handouts of the course material, quizzes, a final exam, and a certificate of completion that can easily be verified by an auditor or customer on ERAI’s website.

InterCEPT Class TM-02: Counterfeit Inspection and Testing of Electronic Parts: Visual Inspection and Criteria for Acceptance or Rejection

TM-02 provides an in-depth discussion of external visual inspection associated with detecting counterfeit electronic parts. It will reference both the IDEA 1010B standard and the SAE AS6171 requirements for external visual inspection. The class includes video footage and images from a test lab to help the student understand how the visual inspection is performed. Device images will be reviewed so that the student can recognize the indicators of counterfeit or substandard electronic components and understand the criteria for acceptance and rejection.

The course covers:
  • External visual inspection
    • Equipment needed, equipment costs
    • How to perform the test including on-site video and step-by-step instructions
    • Criteria for acceptance
    • Criteria for rejection
  • Content of test reports
  • Training considerations
  • Outsourcing visual inspection


Students completing the class will:

  • Understand the terminology for external visual inspection.
  • Understand how to perform the tests.
  • Understand the criteria for acceptance and rejection.
  • Understand the general format of the test report for external visual inspection.
  • Assess additional considerations including equipment needed, equipment cost, training and outsourcing options.

The class is best suited for individuals with quality, inspection and testing, purchasing, and sales responsibilities. Students taking TM-02 are expected to have a working knowledge of what a counterfeit part is and where counterfeit parts come from. If you do not have sufficient background knowledge, InterCEPT recommends completion of CF-01: A Historical Overview of Counterfeit Electronic Part Activity: The Risk, Response, and Solution.

Click here to register for TM-02





Applied DNA Sciences Continues Contract with DLA

On September 11, 2018, Applied DNA Sciences announced the signing of a new contract with the Defense Logistics Agency’s (DLA) Land and Maritime’s Product Test Center (PTC). The contract extends Applied DNA’s services for an additional two years with a one-year optional extension at DLA’s discretion. The services include the supplies and services for unique DNA marks in various inks and quality assurance authentication testing and training specific to FSC 5962 microcircuits.

In 2011, Applied DNA Sciences completed a program to mark chips for the DLA along with the cooperation of an original component manufacturer. Subsequently, Applied DNA Sciences was named as the provider of authentication services for the DLA in August of 2012 to provide DNA authentication on high risk items to assist in the identification of authentic products and deter counterfeits from infiltrating the Department of Defense federal supply.

Janice Meraglia, Vice President of Government and Military Programs stated, “it is our honour to be part of DLA’s Warfighter First mission that is dedicated to supporting the men and women that protect our country”.

Read more at:

https://www.securingindustry.com/press-releases/applied-dna-executes-new-two-year-contract-with-the-us-defense-logistics-agency/s135/a8425/#.W7Z7l_YpCUl





White Paper Review


Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States

Why you should read it: This report describes the forces affecting the defense industrial base, identifies primary categories of risk, illustrates impact within sectors and provides recommendations for mitigation.

ERAI Insight: In July of 2017, President Trump directed the Secretary of Defense to analyze a government effort to asses risk, identify impacts and propose recommendations in support of a healthy manufacturing and defense industrial base. Among the major findings of the report are: macro forces have led to impacts primarily in the sub-tiers of the defense supply chain; a surprising level of foreign dependence on competitor nations exists; workforce challenges face employers across all sectors; and many sectors continue to move critical capabilities offshore in pursuit of competitive pricing and access to foreign markets. The report provides recommendations to address the challenges addressed in the report and a set of recommendations aligned towards investment, policy, regulation and legislation as a multifaceted approach.

Click here to open



Weapon Systems Cybersecurity

Why you should read it: The US Government Accountability Office released a report in early October 2018 analyzing the state of the Department of Defense’s weapon systems cybersecurity. While the report identified mission-critical vulnerabilities, the GAO did not provide any recommendations to the DoD.

ERAI Insight: The report analyzed factors that contribute to the current state of the DoD’s cybersecurity, vulnerabilities of weapons systems under development and steps the DoD is taking to develop more cyber resilient weapons systems. The report acknowledges that multiple factors make weapon systems security increasingly difficult and found that DoD has only started addressing the challenges posed by threats to complex and networked systems. Despite warnings, cybersecurity has not been a focus of weapon systems acquisitions and major vulnerabilities are present. While no recommendations were provided, the GAO is planning on continuing its evaluation of key aspects of the DoD’s cybersecurity efforts in the future.

Click here to open



Deliver Uncompromised

Why you should read it: Mitre’s report focuses on how the Department of Defense must improve its use of existing resources to identify, mitigate and recover from network and supply chain threats through the use of increased coordination of agencies, new standards and best practices, and changes to acquisition strategies.

ERAI Insight: The Department of Defense should be the lead on efforts to reduce government and private sector’s exposure to cybersecurity threats and the enhancement of security of assets and capabilities. These efforts must be made throughout the entire defense base to avoid compromises resulting from cyberattacks. Not enough attention is centered around operational security and software assurance, and risk quantification and mitigation are not prioritized. Through changes made to the acquisition process in the DoD and their supply chain, DoD can change its suppliers’ conduct to reduce cyber and supply chain vulnerabilities. The report provides 15 recommended courses of action that address immediate actions that need to be taken along with near, medium, and long-term changes that should be implemented by the DoD and its contractor base to address cyber and supply chain security challenges.

Click here to open



Foreign Economic Espionage in Cyberspace

Why you should read it: The Office of the National Counterintelligence Executive report provides a warning of the industrial sectors and technologies it has determined to be of highest interest for a cybersecurity and cyberespionage attack.

ERAI Insight: The report provides the latest unclassified information about attempts made by foreign entities to steal US trade secrets through cyberspace and how industrial espionage poses a significant threat to the USA’s security and competitive advantage. The report also focuses on how foreign intelligence services pose the most persistent threat, primarily from China, Russian and Iran. These entities are targeting not only US government systems, but are also greatly focused on private energy, biotechnology, defense, and IT companies. In addition, other disruptive threats such as software supply chain infiltration, enhanced foreign laws, and foreign technology companies with links to host governments pose evolving threats as technology advances in the global information sphere.

Click here to open






Q3 2018 ARTICLES YOU CAN’T AFFORD TO MISS


Is There an End in Sight to the Electronic Components Crisis?
http://smt.iconnect007.com/index.php/article/111555/is-there-an-end-in-sight-to-the-electronic-components-crisis/111558/?skin=smt

Darpa Plans a Major Remake of U.S. Electronics
https://spectrum.ieee.org/tech-talk/computing/hardware/darpas-planning-a-major-remake-of-us-electronics-pay-attention

Component Shortages Give OEMs Cold Feet on Inventory Commitments
https://www.ebnonline.com/author.asp?section_id=4131&doc_id=283546

Future electronic components to be printed like newspapers
http://www.newelectronics.co.uk/electronics-news/future-electronic-components-to-be-printed-like-newspapers/176404/

US expresses concerns over supply chain cyberattacks
http://www.newelectronics.co.uk/electronics-news/us-expresses-concerns-over-supply-chain-cyberattacks/176707/

Trump’s Tech Tariffs Are Awesome, for Southeast Asia
https://www.bloomberg.com/view/articles/2018-07-30/trump-s-tech-tariffs-are-awesome-for-southeast-asia

Tariffs Raise ‘Red Flag’ on Component Supply Risks
https://epsnews.com/2018/08/06/tariffs-raise-component-risks/

President Trump to Sign Legislation on Monday to Focus Leadership and Resources on Defense Electronics
http://smt.iconnect007.com/index.php/article/112079/president-trump-to-sign-legislation-on-monday-to-focus-leadership-and-resources-on-defense-electronics/112082/?skin=smt

Distributors’ sales soar as component demand remains robust
http://www.electronics-sourcing.com/2018/08/13/distributors-sales-soar-as-component-demand-remains-robust-by-james-carbone/

How China steals U.S. secrets
https://finance.yahoo.com/news/china-steals-u-s-secrets-124029052.html

Electronic Component Shortages Will Worsen Through Q4
https://epsnews.com/2018/08/30/component-shortages-worsen/

The dangers of counterfeit parts and how to protect yourself
https://born2invest.com/articles/dangers-counterfeit-electronics-parts-protect/

The Big Hack: How China Used a Tiny Chip to Infiltrate U.S. Companies
https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies

Chip-Level Spying Has a Long History Under the Chinese Regime
https://www.theepochtimes.com/chip-level-spying-has-a-long-history-under-the-chinese-regime_2681756.html