Chinese con-artists cop to US military counterfeit chip switch caper

Trio tried to buy stolen Navy Xilinx FPGAs for $37k each, replace them with duds

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Chinese national Daofu Zhang has pleaded guilty to conspiring to buy top-end field-programmable gate arrays (FPGAs) stolen from a US Navy base and replacing the swiped silicon with counterfeit duds.

Last Friday, in Connecticut's New Haven federal court, Zhang, 40, admitted offering to purchase military-spec chips from a US government worker who turned out to be an undercover agent. Zhang's co-conspirators and fellow Chinese nationals – Jiang Yan, 33, and Xianfeng Zuo, 38 – entered guilty pleas in March.

The three were trying to get their hands on Xilinx military-spec FPGAs – devices that have extended temperature ranges, are radiation-hardened, and so on – which can't be taken overseas without an export license.

The trio offered their American contact US$37,000 apiece for 22 FPGAs, no questions asked.

Their friend – actually an undercover agent – told them the only way to obtain the devices was for him to steal them from the military's inventory. The conspirators offered to provide non-working counterfeit chips from China to replace the missing stock.

The three, along with their Chinese company called HK Potential, were already under investigation for trafficking in bogus semiconductors, having sold 45 fake Intel processors to an undercover agent in 2012.

They were arrested in December 2015 when they travelled to the US expecting to take delivery of the Xilinx FPGAs after sending eight dud chips to their contact.

America has an ongoing problem trying to plug the flow of counterfeit devices. In 2008, the FBI found counterfeit kit in US military networks, and in 2010, Florida woman Stephanie McCloskey pleaded guilty to helping a company called VisionTech Components sell fake chips to the military.

Zhang, Zuo and Yan await sentencing. Zhang faces a maximum ten-year stretch and a $2m fine; Yan's and Zuo's conspiracy charges could net a maximum of five years in the cooler, and a $250,000 fine. ®

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