A report by Bloomberg last week alleged that tiny chips had been inserted into servers sold by a company called Supermicro in the Chinese factories where most of the hardware was produced.
The alleged infiltration of servers assembled in China for the eventual use of US tech companies including Apple and Amazon could uproot the global technology supply chain, according to the cyber warfare chief of the Taiwanese military. “If this all gets dragged out into daylight, we will see a commercial storm,” said Major General Ma Ying-han, commander of the electronic warfare command.
The company, as well as key customers mentioned in the article including Apple and Amazon, strongly denied the report. But it has still prompted discussion among industry executives and government officials about whether supply chains could shift away from China over the security concerns.
“If the US wants to break the ‘red’ sections of the supply chain, that’s a very good step and approach. If this becomes common practice, I believe that alarm bells will start ringing in all major countries with regard to contract manufacturing,” said Major General Ma.
This is something that must have happened at the very top of the supply chain. It must have been built into the process Major General Ma Ying-han, Taiwan military cyber warfare chief Taiwan itself is both heavily exposed to Chinese hacking attacks and deeply invested in the China-based manufacturing of electronics hardware for the global market.
Taipei has also long restricted most Chinese investment in its electronics manufacturers and is moving to encourage Taiwan-owned companies to move production out of the mainland. A retired US government official formerly involved in China policy said the publication of the Supermicro story was set to increase pressure on manufacturers to diversify production away from the country. “This is what the trade war is really about: de-linking the American and Chinese economies,” he said.
Several Taiwanese government ministries were working to clarify the veracity of the Bloomberg report and whether its electronics manufacturers had also been affected by the incident. “We are very concerned about this,” a senior official said. Bloomberg reported that a tiny extra semiconductor had been inserted on the motherboards, the printed circuit board on which all key electronic components of any gadget are mounted.
Major General Ma said the nature of modern electronics production, where chip elements were designed as one block, meant that it would have been almost impossible to manipulate the motherboards manually. “This is something that must have happened at the very top of the supply chain. It must have been built into the process,” he said.