Engineer faces 219 years in jail for smuggling military chips to China

According to the Department of Justice, part-time Los Angeles resident Yi-Chi Shih, 64, has been found guilty of the charges including conspiring to export military-grade semiconductor chips to China without an export license.

Following a six-week trial, Shih was found guilty of 18 counts in total, including mail fraud; wire fraud; making false statements to a government agency; conspiracy to gain unauthorised access to a protected computer to obtain information, and subscribing to a false tax return.

The case was investigated by the FBI, the Department of Commerce, the Bureau of Industry and Security, the IRS, and the Royal Canadian Mounted Police, which was required to search the lab of Shih’s brother (an academic based at Montreal’s McGill University).

It was determined that Shih worked with fellow defendant Kiet Ahn Mai - who posed as a legitimate customer - to break into a protected computer belonging to a US chipmaker which manufactures monolithic microwave integrated circuits (MMICs) for missiles, missile guidance systems, fighter jets, electronic warfare and countermeasures, and radar applications for the US Air Force, Navy, and Defense Advanced Research Projects Agency.

The two men then shipped the chips to Chengdu GaStone Technology Company (CGTC), of which Shih is president. CGTC - which was added to the Department of Commerce’s Entity List in 2014, preventing US companies from doing business with it without a license - is building an MMIC manufacturing plant. It is believed to be involved in the “illicit procurement of commodities and items for unauthorised military end use” in China.

Shih claimed that he never sent the US chipmaker’s products to China, but that he had used them for his own academic research project. He will face a sentencing hearing in which he could face a maximum sentence of 219 years in federal prison. He plans to appeal, although it is expected that such an appeal would be rejected.

“This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns,” said US Attorney Nick Hanna in a statement. “My office will enforce laws that protect our nation’s intellectual property from being used to benefit foreign adversaries who may compromise our national security.”

“The FBI is committed to protecting institutions from adversaries who seek to steal sensitive American technology under the guise of research,” said Paul Delacourt, assistant director in charge. “We will continue to work collaboratively with our federal partners to identify and hold accountable individuals who plunder our research or intellectual property at the expense of the American people and our national security.”