China Infiltrated 30 US Companies Including Apple and Amazon with Hardware Hack

Amazon discovered a hardware hack while testing servers supplied by a Chinese company. Apple was hit as well.

Bloomberg has a fascinating report on how China used a tiny chip to infiltrate U.S. companies. The attack by Chinese spies reached almost 30 U.S. companies, including Amazon and Apple, by compromising America’s technology supply chain, according to extensive interviews with government and corporate sources.

Please consider The Big Hack.

In 2015, Amazon.com Inc. began quietly evaluating a startup called Elemental Technologies, a potential acquisition to help with a major expansion of its streaming video service, known today as Amazon Prime Video. Based in Portland, Ore., Elemental made software for compressing massive video files and formatting them for different devices. Its technology had helped stream the Olympic Games online, communicate with the International Space Station, and funnel drone footage to the Central Intelligence Agency. Elemental’s national security contracts weren’t the main reason for the proposed acquisition, but they fit nicely with Amazon’s government businesses, such as the highly secure cloud that Amazon Web Services (AWS) was building for the CIA.

In late spring of 2015, Elemental’s staff boxed up several servers and sent them to Ontario, Canada, for the third-party security company to test, the person says.

Nested on the servers’ motherboards, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design. Amazon reported the discovery to U.S. authorities, sending a shudder through the intelligence community. Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships.

The chips on Elemental servers were designed to be as inconspicuous as possible, according to one person who saw a detailed report prepared for Amazon by its third-party security contractor, as well as a second person who saw digital photos and X-ray images of the chips incorporated into a later report prepared by Amazon’s security team. Gray or off-white in color, they looked more like signal conditioning couplers, another common motherboard component, than microchips, and so they were unlikely to be detectable without specialized equipment.

This system could let the attackers alter how the device functioned, line by line, however they wanted, leaving no one the wiser. To understand the power that would give them, take this hypothetical example: Somewhere in the Linux operating system, which runs in many servers, is code that authorizes a user by verifying a typed password against a stored encrypted one. An implanted chip can alter part of that code so the server won’t check for a password—and presto! A secure machine is open to any and all users. A chip can also steal encryption keys for secure communications, block security updates that would neutralize the attack, and open up new pathways to the internet.

Tiny Chips Disguised as Couplers

Big Hack

Satan's Bargain

Over the decades, the security of the supply chain became an article of faith despite repeated warnings by Western officials. A belief formed that China was unlikely to jeopardize its position as workshop to the world by letting its spies meddle in its factories. That left the decision about where to build commercial systems resting largely on where capacity was greatest and cheapest.

You end up with a classic Satan’s bargain,” one former U.S. official says. “You can have less supply than you want and guarantee it’s secure, or you can have the supply you need, but there will be risk. Every organization has accepted the second proposition.”

Bloomberg notes there was a small, invite-only meeting in McLean, Va., organized by the Pentagon to discuss these attacks. "Attendees weren’t told the name of the hardware maker involved, but it was clear to at least some in the room that it was Supermicro."

No Commercially Viable Way to Detect Attacks

In the three years since the briefing in McLean, no commercially viable way to detect attacks like the one on Supermicro’s motherboards has emerged—or has looked likely to emerge. Few companies have the resources of Apple and Amazon, and it took some luck even for them to spot the problem. “This stuff is at the cutting edge of the cutting edge, and there is no easy technological solution,” one of the people present in McLean says. “You have to invest in things that the world wants. You cannot invest in things that the world is not ready to accept yet.”

The report is fascinating as well as scary. 30 US corporations were hit.

Hardware chips can do virtually anything. These tiny chips communicated to external servers and received instructions back from them.

The report did not say what information was stolen. Likely, no one even knows.

Mike "Mish" Shedlock

Comments (32)
No. 1-17
stillCJ
stillCJ

Editor

The one thing you can count on the Chinese to do is steal any technology or secrets that they can. This should not surprise anyone. Maybe US companies and government will get more serious about security now; they cannot ignore this.

hmk
hmk

This is one of many reasons to finally get the unfair trade practices that China engages in rectified. Milton Friedmans recommendations on free trade don't account for engaging in free trade with a maleovlent country trying to essentially dominate you fiancially and militarily. We are giving them the rope to hang ourselves with. On a different playing field the competition would be good for the USA and hopefully make us more comptetive even if they had uneven advatages on their end. But to let a country that killed 50 million of their own citizens become a world power fiancially and militarily would be suicide. I am okay with the increase in costs a trade war would bring abou,t but this sacrifice is better than going into a hot war. I am hoping the Chinese economic miracle implodes before this happens. No centrally controlled command economy has ever been successful in the long run. Free market capitalism has been the most successful economic model in history and has lifted more people out of poverty than any other system. The problem over here is that it has evolved in a corrupt crony capitalist system. We now have the best govt money can buy.

Kinuachdrach
Kinuachdrach

Interesting that Maven did not pick up this article by Mish. (Censor it ???) Makes one wonder whether Maven runs on severs with Chinese motherboards.

Because China makes the motherboards for most servers worldwide, this affects the EU, Russia, Japan, India too. Are the Chinese looking for data -- or do they want to be able to switch off the enemy servers before a military attack?

abend237-04
abend237-04

The smart move would have been to go to quietly go to Super Micro, confront them with certain corporate death, and agree to their hanging an engineering change on all the compromised servers providing an NSA back door to the Chinese back door...

Brian1
Brian1

This has been a complete no-brainer for more than a decade (or longer). Supermicro took the hit today since they were singled out in the report but there should be no doubt that every manufacturer has fallen victim to this. Every circuit board is mfgd in China and has been for a very long time. Of course Chinese Intelligence is manipulating them - we would be too. We know from the Snowden docs that the NSA has to interdict shipments of hardware to insert their chips; inserting them during the manufacturing process is much easier. State-level intelligence agencies have unlimited budgets for stuff like this. It's what they exist to do.