A new report claims China has escalated its cyber warfare against the American economy.
According to a report by Bloomberg Businessweek, three years ago, when Amazon was checking the security of a company it wanted to buy, experts found that tiny chips had been embedded in the motherboards of computers made in China that, as Bloomberg reported “allowed the attackers to create a stealth doorway into any network that included the altered machine.”
Then experts determined that the chips were planted by the Chinese Army and that they ended up in computers used by more than 30 companies, including one major bank and Apple.
The report as published by Bloomberg Businessweek has been met with a wall of denials from Amazon, Apple and other companies named in the Bloomberg report.
“It’s untrue that (Amazon Web Services) knew about a supply chain compromise, an issue with malicious chips, or hardware modifications when acquiring Elemental,” Amazon said in an email statement.
Apple was also emphatic that nothing was ever wrong.
“On this we can be very clear: Apple has never found malicious chips, ‘hardware manipulations’ or vulnerabilities purposely planted in any server,” the company said in a statement to Bloomberg Businessweek.
The Washington Post noted the core of what made the allegations so serious.
“What is economically important, however, is how the Chinese military did this. They weaponized the complex supply chain through which most sophisticated electronics are built. That has huge implications for the world economy,” The Post wrote.
The Post said that incidents like this can ruin trust, leading to supply chain decisions that could move sensitive work out of China, exacerbating trade tensions between the U.S. and China.
Finding hardware infiltrations is also hard because most defenses look for software hacks, Katie Moussouris, founder and CEO of Luta Security, told The Verge.
“If you manage to put something in place in hardware, not only is it difficult to detect, it’s also something that can bypass even the most sophisticated software security measures,” Moussouris said.
She said, though, that the fear many are experiencing as they evaluate this new report is the price to pay for a decentralized global supply chain.
“We’ve made choices to outsource the manufacturer of a lot of components in order to be able to get them to market and have them be a viable product,” she says. “Making sure that we understand that we’ve made these tradeoffs is the part that might be taking people by surprise.”
As experts try to sort out the big picture, investors knew whatever it was, it spelled trouble.
The Miami Herald reported that computer giant Lenovo was down 15.1 percent while on the Hong Kong stock exchange on Friday while ZTE lost 11 percent.
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