Chinese Nationals Tried to Export Military Chips, U.S. Says

  • Three charged with trying to buy chips from undercover agent
  • Prosecutors say suspect offered to swap fakes for real thing

Three Chinese nationals were charged with scheming to obtain and export semiconductors stolen from the U.S. military, federal prosecutors in Connecticut said.

Daofu Zhang, 50; Jiang Guanghou "Ben" Yan, 33; and Xianfeng Zuo, 37; were arrested Thursday in Milford, Connecticut, while trying to take delivery of chips from an undercover agent, Connecticut U.S. Attorney Deirdre Daly said in a statement.

Federal agents began probing Yan and a Chinese company, HK Potential, three years ago for trafficking fake chips, Daly said. In October 2014 and March of this year, Yan sold 45 counterfeit Intel microprocessors to an undercover agent who told him they would be used on a U.S. Navy submarine contract, according to Daly.

In July, Yan asked the agent if he could obtain 22 military-grade semiconductors made by Xilinx, which he would buy for $37,000 each, according to the statement. Yan offered to provide fakes that could be substituted for the real chips so the theft wouldn’t be detected, prosecutors said.

Yan shipped eight fakes to the undercover agent before all three suspects traveled to the U.S. this month to get the real Xilinx semiconductors, prosecutors said.

The three have been charged with violating the International Emergency Economic Powers Act, which carries as long as 20 years in prison. They appeared before a federal judge in New Haven, Connecticut, Thursday and were detained.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE