Home A chip smuggling operation is busted sending chips to China

A chip smuggling operation is busted sending chips to China

According to Tomshardware, the largest chip smuggling bust to date — contained 53,000 chips valued at $11.6 million, uncovered by South Korea’s customs service. Also, from BusinessKorea, it was discovered that US technology was being used to transit strategic semiconductors from Korea to China. Due to the sheer size of this smuggling operation, ‘Company A,’ as a whole, rather than just one person, was responsible. Prosecutors have charged and will prosecute all of the company’s officials for these crimes, which were committed over three years.

Between August 2020 and August 2023, ‘Company A’ lawfully purchased chips manufactured in the United States and lawfully imported them into South Korea. By not declaring them to customs, some chips were smuggled into China via air in 144 separate journeys. While smugglers have made numerous smaller-scale attempts to import consumer GPUs and CPUs into China, the chips used in this operation were designed to convert analog data to digital. These chips have been subject to export and import restrictions since 2020 because they can be utilized as WMDs.

This is by far the most extensive smuggling operation that has ever been busted — especially in terms of quantity and value.

The previous record holder in stories we reported was an attempt to smuggle $4 million worth of CPUs, SSDs, and other equipment from Hong Kong to China. Similarly, the would-be smuggler misrepresented his items to customs officers, who were not duped and exposed the scheme.

The company selling these chips left a paper trail when purchasing the chips. Still, the company was able to keep its strategy scheme hidden by skimming off the top to legitimate businesses. The company selling the chips ordered more chips than it needed from legitimate sources. Many say that the smuggling to China should have been found out sooner.

Unlike most other smuggling operations, this one from South Korea was notable for the effective smuggling of all the products, and the crime wasn’t found until months after it was purportedly done. The CEO and other executives of the main company involved (that hasn’t been named yet) may face dire repercussions. Still, it’s possible that the chips are being utilized for other, as-yet-unknown purposes—possibly even inside weapons of mass destruction (WMDs), as the US government fears. Both China and Russia are advancing in at least some of these areas.

Featured Image Credit: Photo by Cottonbro Studio; Pexels

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Deanna Ritchie
Former Editor

Deanna was an editor at ReadWrite until early 2024. Previously she worked as the Editor in Chief for Startup Grind, Editor in Chief for Calendar, editor at Entrepreneur media, and has over 20+ years of experience in content management and content development.

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