Sun Corp. Soars on Ties to Company That Helped FBI Crack iPhone

Plot Thickens in Apple vs. FBI Privacy Battle
  • Japanese company owns Cellebrite, which worked with FBI
  • Shares are up 40 percent since U.S. said it didn't need Apple

Shares of Sun Corp., a Japanese maker of pinball-style games, have soared since reports surfaced that an Israeli company it owns helped the U.S. government hack into an iPhone involved in a terrorist attack.

The Tokyo-listed Sun is up more than 40 percent since March 21, when U.S. authorities said a third party had demonstrated a way of accessing data on the Apple Inc. iPhone used in the San Bernardino, California, mass shooting last year. That third party, according to people familiar with the matter, is Cellebrite Mobile Synchronization Ltd., which Sun Corp. has owned for almost a decade.

While neither Cellebrite, nor Sun Corp., nor the FBI have confirmed the link, the Japanese company’s shares have more than doubled since Feb. 16 when Apple first refused to help the FBI on grounds it threatened the privacy and data security of millions of iPhone users.

On Tuesday, Sun Corp.’s shares jumped 14 percent after the FBI said it was successful in accessing the device using an unnamed outside party. The stock gained as much as 7.5 percent to 1,096 yen per share in Tokyo trading Thursday.

"Although the FBI didn’t get a legal decision that would require Apple to hack around its own security software, it created a situation where they can go to third parties to do that," said Matt Larson, an analyst at Bloomberg Intelligence. "Companies like Cellebrite may have found a niche industry of assisting the FBI unlock personal devices in select cases moving forward."

Preserving Evidence

Israeli daily Yedioth Ahronoth last week identified Cellebrite as the FBI’s partner in cracking the iPhone. Cellebrite, which has captured a large slice of the mobile forensics market over the past decade, already had the FBI as a client before this project, people familiar with the matter said, asking not to be identified as the issue is private. 

The Petah Tikva, Israel-based company sells hardware and software for extracting data from hand-held devices, even if it has been encrypted or deleted. Cellebrite employs more than 500 people and has offices in Israel, the U.S., Brazil, Germany, Singapore and the U.K., according to its website. Founded in 1999, Cellebrite was bought by Sun Corp. in 2007, reportedly for $17.5 million.

The value of forensics companies such as Cellebrite, particularly for law enforcement agencies, goes beyond accessing encrypted data, according to Jonathan Zdziarski, a cyber-security researcher and iPhone security expert who consults with law enforcement.

"As you copy the evidence from the phone, you need to be able to catalog it and demonstrate you haven’t tampered with it -- show that the file that came from the phone is the same file you are using in court," he said. "There have been plenty of free hacking tools available -- it’s not just about getting to the data. All of these problems are addressed by forensics companies like Cellebrite."

Cellebrite is a familiar name in the forensics industry, Zdziarski said, and their devices are used "by almost every law enforcement department that does serious digital forensics work." 

Before entering the high-tech cyber-security industry with its Cellebrite purchase, Sun Corp. was known as a manufacturer and vendor of electronic equipment, notably digital Pachinko machines -- a type of pinball game popular throughout Japan. It has also produced video games.

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