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This article was published on July 4, 2019

Engineer nabbed smuggling US military-grade chips to China faces 219 years in prison

Engineer nabbed smuggling US military-grade chips to China faces 219 years in prison
Ravie Lakshmanan

An electrical engineer is facing up to 219 years in federal prison after being found guilty of exporting military-grade semiconductor chips to China.

Yi-Chi Shih — the 64-year-old engineer in question, and also a part-time Los Angeles resident — was found guilty of conspiring to export sensitive semiconductor chips with military applications to China without the required export license, according to the Department of Justice (DoJ).

“The jury also found Shih guilty of mail fraud, wire fraud, subscribing to a false tax return, making false statements to a government agency, and conspiracy to gain unauthorized access to a protected computer to obtain information,” the DoJ said.

Based on evidence presented during the course of a six-week trial, it was determined that Shih, alongside co-defendant Kiet Ahn Mai, illegally gained access to a protected computer belonging to an unnamed US firm that manufactured semiconductor chips and Monolithic Microwave Integrated Circuits (MMICs).

MMICs have a variety of applications. They have been used in missiles, guidance systems, fighter jets, and electronic warfare.

The company’s systems were fraudulently accessed after Mai posed as a potential customer looking to buy custom chips for use solely in the US.

But in reality, Shih and Mai shipped the chips to Chengdu GaStone Technology Company (CGTC) — a Chinese firm building an MMIC manufacturing plant — thereby defrauding the company out of its proprietary, export-controlled items.

According to the DoJ, Shih was the president of CGTC, which was placed on the Commerce Department’s Entity List back in 2014, for “its involvement in activities contrary to the national security and foreign policy interest of the United States — specifically, that it had been involved in the illicit procurement of commodities and items for unauthorized military end use in China.”

To fund the manufacturing of MMICs, Shih used Pullman Lane Productions LLC, a Hollywood Hills-based company he controlled, court documents reveal. In a classic case of “follow the money,” it was established that Pullman Lane Productions received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC.

Prosecutors said the victim company’s semiconductor chips have been deployed for commerical and military use, with customers including the Air Force, Navy, and the Defense Advanced Research Projects Agency (DARPA).

On June 26, Shih was convicted of all 18 charges by a federal grand jury. A sentencing hearing is yet to be scheduled, where Shih faces a statutory maximum sentence of 219 years in federal prison.

The case was jointly investigated by the FBI, the US Department of Commerce, Bureau of Industry and Security, and the IRS, along with assistance from the Royal Canadian Mounted Police.

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