Rice Size Microchip

Bloomberg article dated October 4, 2018, 2:30 PM GMT+5:30, has created a sensation in the world over security services, as reported ‘a rice size microchip for surveillance was found in China make Supermicro’s motherboards’ and almost all nations in the world procure electronic items manufactured in China.
It has first come in to the notice in 2015, when Amazon.com Inc. was evaluating ‘Elemental Technologies’ (Based in Portland-Ore). Elemental Technology fit nicely with Amazon’s government businesses, such as the highly secure cloud that Amazon Web Services (AWS) was building for the CIA, hence Amazon consider it as a potential acquisition. During Third party evaluation, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design. The chips had been inserted at factories run by manufacturing subcontractors in China. With this an another level of war by supply chain attack has initiated.
It is also noticed that a state-backed Chinese IC firm was in talks with government agencies to raise from 150 to 200 billion yuan (US$31.5 billion) for a second fund vehicle to invest in domestic chip companies, as China continues its quest to become leader in the industry. The Investment will target areas ranging from processor design and manufacturing to chip testing and packaging, potentially benefiting industry leaders such as Huawei and ZTE, as well as Tsinghua Group. And it is a known fact that China's Huawei and ZTE have been banned from providing 5G technology equipment to Australia, citing national security concerns.
There is one more angle to this issue, why Elemental Technologies is targeted? The Answer lies in the function of Elemental Technologies; Back in 2006, three engineers in Oregon had a clever idea. Demand for mobile video was about to explode, and they predicted that broadcasters would be desperate to transform programs designed to fit TV screens into the various formats needed for viewing on smartphones, laptops, and other devices. To meet the anticipated demand, the engineers started Elemental Technologies. The resulting software dramatically reduced the time it took to process large video files. Elemental servers sold for as much as $100,000 each, at profit margins of as high as 70 percent, according to a former adviser to the company.
Elemental also started working with American spy agencies. In 2009 the company announced a development partnership with In-Q-Tel Inc., the CIA’s investment arm, a deal that paved the way for Elemental servers to be used in national security missions across the U.S. government. Public documents, including the company’s own promotional materials, show that the servers have been used inside Department of Defence data centres to process drone and surveillance-camera footage, on Navy warships to transmit feeds of airborne missions, and inside government buildings to enable secure videoconferencing. NASA, both houses of Congress, and the Department of Homeland Security have also been customers. This portfolio made Elemental a target for foreign adversaries.
Is this only a theory or reality? still a big question, but no one can deny that if this is true than China has already an edge over majority of the nations. Here let’s discuss the potential damages if it is true.

1.01 Extent of Chinese Products
China is the largest export economy in the world. In 2016, China exported $2.27 Trillion which is 14.2% of the total world Export ($15.99 Trillion). The top exports of China are Computers ($173B), Broadcasting Equipment ($160B), Telephones ($109B), Integrated Circuits ($64.6B) and Office Machine Parts ($42.8B) etc. The top export destinations of China are the United States ($436B), Hong Kong ($250B), Japan ($148B), Germany ($99B) and South Korea ($87.2B).
China borders Afghanistan, Bhutan, Hong Kong, India, Kazakhstan, Kyrgyzstan, Laos, Macau, Mongolia, Nepal, Pakistan, North Korea, Tajikistan, Vietnam and Russia by land and Brunei, Indonesia, Japan, South Korea, Malaysia, the Philippines and Taiwan by sea.
China, which by some estimates makes 75 percent of the world’s mobile phones and 90 percent of its PCs, have the access to install surveillance device in the goods.
1.02 Strength of China
• China's rise since the start of the era of reform in 1978, has certainly been exceptional. In 1976 the country totalled 1% of the world's economy; today it represents more than 7%, with growth forecasts taking it in some cases to 20% in 2025 (the European Union would then total 21%, as the USA).
• It is now the world's leading export and manufacturing power, having overtaken the USA in 2010 from a quantitative point of view (productivity remaining well below that of the USA).
• China has a billion people with one of the world’s highest average IQs and the largest economy (in terms of PPP) in the world.
• According to experts at the International Institute for Strategic Studies - the IISS - in London, it is China and no longer Russia, that increasingly provides the benchmark against which Washington judges the capability requirements for its own armed forces.
• The US-based National Science Board, that advises the President and Congress on science and engineering policy issues, says that China is now decisively the second-largest performer of research and development.
• China has developed the world’s largest amphibious aircraft, AG600, with four turboprop engines, it can draw on-board 12 tons of water within 20 seconds, with a maximum take-off weight of 53.5 tons.
• Five-hundred-meter Aperture Spherical Telescope (FAST), or Tianyan, is the world's largest of its kind. It is 10 times more sensitive than the steerable 100-meter telescope near Bonn, Germany.
• Chinese make supercomputer, was announced as the winner of the 2016 ACM Gordon Bell Prize in Salt Lake City on Nov 17, 2016. The prize is known as the equivalent of the Nobel Prize for the field of high-performance computing applications.
1.03 Potential Threats
The computers manufactured/assembled in China are working in almost all private/government offices, which could be traced and monitored.
At the time of war, foreign influence in electronic equipment could be a strategic advantage.
In the last three years, no commercially viable way is available to detect attacks like the one on Supermicro’s motherboards (if it is so) has emerged.
I am under fear while writing this as even my computer could have a bug, which could affect me. Please share your fear or strength as well....
Bibliography
1. https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies
2. https://atlas.media.mit.edu/en/profile/country/chn/
3. http://www.worldstopexports.com/chinas-top-10-exports/
4. https://www.wto.org/english/res_e/statis_e/wts2016_e/WTO_Chapter_09_tables_e.pdf
5. https://www.quora.com/Is-China-a-potential-threat-to-the-West-including-Australia
6. https://www.robert-schuman.eu/en/european-issues/0235-china-s-strengths-and-weaknesses
7. http://elementtechnologies.net/risk-and-security
8. http://www.chinadaily.com.cn/china/2016latestscientficachievements/index.html
9. http://www.atimes.com/article/chinas-drive-microchip-self-sufficiency-picks-steam/
10. https://www.cnbc.com/2018/08/23/huawei-and-zte-banned-from-selling-5g-equipment-to-australia.html