China could use its microchips to penetrate U.S. weapons systems

U.S. intelligence agencies have begin investigating whether foreign powers and foreign intelligence services have been involved in breaking into the U.S. military supply chain.. At the suspect  top of the list is China.

One potential company under consideration is Chinese chip-maker Semiconductor Manufacturing International Corp. (SMIC).

Last week, a jury in California ruled in favor of Taiwan Semiconductor Manufacturing Co. that had alleged that SMIC was engaged in stealing trade secrets and had violated a prior settlement agreement. SMIC could end up paying as much a $1 billion in damages. TSMC, based in Taiwan, is a leading semiconductor “foundry” or company that provides manufacturing services to designers of computer chips. SMIC, based in Shanghai, is a younger competitor.

China specialists say the case is significant because SMIC, despite being run by a nominal “Taiwanese” Mainlander, is a majority-owned PRC government subsidiary.

What is worrisome is that virtually all U.S. semiconductor companies contract with TSMC to make their wafers.

A major concern is that China has obtained design and other technology that could allow it to penetrate U.S. weapons systems containing its microchips.