A smuggling operation involving 53,000 chips being transported from the United States to China.
South Korea has dismantled a smuggling ring that was attempting to transport American chips worth $11.6 million to China. The Korean customs authorities discovered that a business entity known as "Company A" was responsible for this large-scale operation, which involved high-end chip models that used US technology. All the directors of "Company A" have been arrested.
Prosecutors revealed that from August 2020 to August 2023, "Company A" legally imported chips made in the US or containing US technology into Korea. However, many of these chips were transported to China via air in 144 trips until they were discovered. To avoid suspicion, "Company A" invoiced some orders to remain a legitimate business. However, they often ordered too many chips for smuggling purposes.
Tom's Hardware reported that this is the most significant smuggling operation ever busted in terms of value and quantity, with 53,000 chips worth nearly $12 million. The previous largest recorded transaction was in March 2023, when $4 million worth of chips were smuggled from Hong Kong to mainland China.
The US has placed several semiconductor-related bans on China, particularly on chip models that convert analog signals to digital signals. The US government has expressed concerns that Beijing could use these chips for military purposes, including as weapons of mass destruction. It is believed that the "Company A" chips smuggled into China fall under this category.
Last year, the US criminally investigated semiconductor company Applied Materials for "evading the law" by selling tools to SMIC, China's largest chip manufacturing company, without obtaining a license. According to Reuters, Applied Materials transported chip equipment from its factory in Gloucester to a subsidiary in Korea before delivering the goods to SMIC. The transport was carried out in December 2020 after the US added SMIC to the entity list.
Recently, the US has continued to restrict domestic companies and businesses that use US technology from selling chips and chip manufacturing equipment to China due to national security concerns. The Department of Justice and the US Department of Commerce established a special task force to investigate export control violations early last year.
Prosecutors revealed that from August 2020 to August 2023, "Company A" legally imported chips made in the US or containing US technology into Korea. However, many of these chips were transported to China via air in 144 trips until they were discovered. To avoid suspicion, "Company A" invoiced some orders to remain a legitimate business. However, they often ordered too many chips for smuggling purposes.
Tom's Hardware reported that this is the most significant smuggling operation ever busted in terms of value and quantity, with 53,000 chips worth nearly $12 million. The previous largest recorded transaction was in March 2023, when $4 million worth of chips were smuggled from Hong Kong to mainland China.
The US has placed several semiconductor-related bans on China, particularly on chip models that convert analog signals to digital signals. The US government has expressed concerns that Beijing could use these chips for military purposes, including as weapons of mass destruction. It is believed that the "Company A" chips smuggled into China fall under this category.
Last year, the US criminally investigated semiconductor company Applied Materials for "evading the law" by selling tools to SMIC, China's largest chip manufacturing company, without obtaining a license. According to Reuters, Applied Materials transported chip equipment from its factory in Gloucester to a subsidiary in Korea before delivering the goods to SMIC. The transport was carried out in December 2020 after the US added SMIC to the entity list.
Recently, the US has continued to restrict domestic companies and businesses that use US technology from selling chips and chip manufacturing equipment to China due to national security concerns. The Department of Justice and the US Department of Commerce established a special task force to investigate export control violations early last year.
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