How counterfeit, defective computer components from China are acquirement into U.S. warplanes and ships

by Brian Grow, Chi-Chu Tschang, Cliff Edwards and Brian Burnsed

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The American army faces a growing threat of potentially fatal equipment non-performance—and in like manner extraneous espionage—because of counterfeit computer components used in warplanes, ships, and communication networks. Fake microchips come from vicious bazaars in rural China to wavering kitchen-table brokers in the U.S. and into complex weapons. Senior Pentagon officials publicly operate along the course of the danger, but government documents, as expedient as interviews by insiders, suggest possible connections between phony parts and breakdowns.

In November 2005, a confidential Pentagon-industry program that tracks counterfeits issued an alert that “BAE Systems experienced field failures,” object military equipment malfunctions, that the large defense contractor traced to

fake microchips. Chips are the minikin electronic circuits found in computers and other gear.

The alert from the Government-Industry Data Exchange Program (GIDEP), reviewed by BusinessWeek (MHP), said couple batches of chips “were never shipped” through their supposed manufacturer, Maxim Integrated Products in Sunnyvale, Calif. “Maxim considers these parts to be counterfeit,” the wary states. (In response to BusinessWeek’s questions, BAE said the alert had referred erroneously to field failures. The company denied there were any malfunctions.)

In a separate falling last January, a chip falsely identified as having been made through Xicor, now a unit of Intersil in Milpitas, Calif., was discovered in the flight computer of an F-15 fighter jet at Robins Air Force Base in Warner Robins, Ga. People familiar with the situation say technicians were repairing the F-15 at the time. Special Agent Terry Mosher of the Air Force Office of Special Investigations confirms that the 409th Supply Chain Management Squadron eventually found four counterfeit Xicor chips.

Potentially more alarming than one or the other of the two aircraft episodes are hundreds of counterfeit routers made in China and sold to the Army, Navy, Air Force, and Marines over the past four years. These fakes could facilitate foreign espionage, as rightly as cause accidents. The U.S. Justice Dept. is prosecuting the operators of an electronics distributor in Texas—and extreme year obtained guilty pleas from the proprietors of a company in Washington State—for allegedly selling the military dozens of falsely labeled routers, devices that direct data through digital networks. The routers were marked as having been made by the San Jose technology giant Cisco Systems (CSCO).

Referring to the seizure of more than 400 fake routers so far, Melissa E. Hathaway, head of cyber security in the Office of the Director of National Intelligence, says: “Counterfeit products have been linked to the crash of mission-critical networks, and may also contain abstruse ‘back doors’ enabling reticulated security to be bypassed and sensitive data accessed [by hackers, thieves, and spies].” She declines to elaborate. In a 50-page presentation for persistence audiences, the FBI concurs that the routers could allow Chinese operatives to “emolument access to otherwise secure systems” (page 38).

It’s self-same difficult to determine whether tiny fake parts have contributed to particular plane crashes or missile mishaps, says Robert P. Ernst, who heads research into counterfeit parts for the Naval Air Systems Command’s Aging Aircraft Program in Patuxent River, Md. Ernst estimates that as many as 15% of all the spare and replacement microchips the Pentagon buys are counterfeit. As a result, he says, “we are having field failures regularly within our weapon systems—and in almost every weapon system.” He declines to provide details but says that, in his opinion, fake regions not quite certainly obtain contributed to earnest accidents. When a helicopter goes down in Iraq or Afghanistan, he explains, “we dress in’cheek by jowl always do the root-cause investigation of each component flash in the pan.”

While anxiety about fake computer components has begun to spread within the Pentagon, top officials consider been slow to respond, says Ernst, 48, a civilian engineer for the military during the term of the past 26 years. “I am very frustrated with the leadership’session inability to react to this issue.” Retired four-star General William G.T. Tuttle Jr., former headmost of the Army Materiel Command and now a defense industry consultant, agrees: “What we have is a pollution of the soldier-like afford chain.”