Report of China spie chips adds pressure on pentagon cloud bidders

Report of China spy chips adds pressure on Pentagon cloud bidders

Originally published October 5, 2018 at 4:55 pm Updated October 5, 2018 at 6:26 pm
 By gowidenews.

A report reaching us says that China sneaked spy chips onto servers used by U.S. companies increases pressure on the Pentagon, as well as on Amazon and other bidders for a big defense contract, to step up measures to secure their systems.

Tech providers vying for a $10 billion Defense Department cloud-computing contract may come under added pressure to prove their systems are secure after a report that China sneaked spy chips onto servers used by U.S. companies, including Amazon, a top contender for the Pentagon award.

Amazon, the market leader in cloud-computing services, was among almost 30 companies, including Apple, whose servers were infiltrated, according to a Bloomberg Businessweek report based on a dozen sources in the government and private sector.

Apple, Amazon, server component seller Super Micro Computer and the Chinese government denied the report. When asked for comment on the implications for its Pentagon bid, Amazon pointed to its statement denying the report.

Security and procurement experts said Amazon’s prospects for winning the cloud-services award may not be affected because it can argue that it was a victim that uncovered the problem. According to the report, Amazon unearthed the breaches, which happened at factories run by subcontractors in China, alerted authorities and took action to limit the consequences.

Still, the revelations increase pressure on the Pentagon as well as on Amazon and the other bidders to step up measures to secure their systems in a global marketplace where integral equipment is manufactured in China.

Rep. Adam Schiff of California said the House Intelligence Committee should seek more information from agencies about whether China sought to infiltrate the computer-chip supply chain.

“No one is safe,” said Darrell West, director of the Center for Technology Innovation at the Brookings Institution. “I’m sure Amazon has some of the very best security people. The fact that they had a problem should alarm everybody.”

The deadline for companies including Amazon, Microsoft and Oracle to submit bids for the Pentagon’s project, which involves moving massive amounts of sensitive government data to a commercially operated cloud system, is Oct. 12.

News of the spy chips pushed Super Micro stock down 42 percent in Thursday and Friday trading.