Chinese tech firms' shares dive after 'spy chip' report

Lenovo shares plunged 15 per cent on fears that consumers and businesses could become reluctant to buy Chinese tech goods. The company has said it takes extensive steps to protect the integrity of its supply chain.
Lenovo shares plunged 15 per cent on fears that consumers and businesses could become reluctant to buy Chinese tech goods. The company has said it takes extensive steps to protect the integrity of its supply chain.PHOTO: REUTERS

Lenovo and ZTE hit by claims that China is hacking networks of US firms and govt agencies

HONG KONG • Lenovo and ZTE Corp shares slid yesterday, hurt by worries about overseas sales after Bloomberg reported that the systems of multiple companies in the United States had been compromised by malicious computer chips inserted by Chinese spies.

In a report published on Thursday, Bloomberg Businessweek cited 17 unidentified sources from intelligence agencies and businesses as saying that Chinese spies had placed computer chips inside equipment used by about 30 companies and multiple US government agencies, which would give Beijing secret access to internal networks.

Apple and Amazon.com's Amazon Web Services (AWS), named as being among the US companies subjected to the attack, strenuously denied the report. Super Micro Computer, which Bloomberg said was the supplier of server boards containing the malicious chips, also denied the report.

Britain's National Cyber Security Centre (NCSC) said it had no reason to doubt the statements made by Apple and Amazon.

"We are aware of the media reports, but at this stage have no reason to doubt the detailed assessments made by AWS and Apple," it said in a statement. "The NCSC engages confidentially with security researchers and urges anybody with credible intelligence about these reports to contact us."

The Bloomberg report did not say that any Chinese tech firms were involved in the attack.

  • 30

  • Number of United States companies reportedly affected by equipment with computer chips embedded by Chinese spies, which would give Beijing secret access to their internal networks.

However, Lenovo shares plunged 15 per cent on fears that consumers and businesses could become reluctant to buy Chinese tech goods.

"Super Micro is not a supplier to Lenovo in any capacity. Furthermore, as a global company, we take extensive steps to protect the ongoing integrity of our supply chain," Lenovo said.

Daiwa Research said: "If the hacking concern keeps snowballing, the potential impact on Lenovo could be substantial." It estimates that Lenovo earns more than a fifth of its revenue from the US.

Chinese telecoms equipment maker ZTE, whose Hong Kong-listed shares fell 11 per cent, declined to comment.

"This could prove a death blow to China's ambitions to leap up the value chain by 2025 as Western markets are likely to slam shut on the likes of Huawei, ZTE, etc," senior Rabobank strategist Michael Every said in a note to clients.

"Taken together with the imposition of 25 per cent tariffs by the US... this will only accelerate a move of the electronics supply chain out of China and into Mexico."

Huawei Technologies declined to comment. China's Ministry of Foreign Affairs did not respond to a request for comment. Beijing has previously denied allegations of orchestrating cyber attacks against Western companies.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 06, 2018, with the headline 'Chinese tech firms' shares dive after 'spy chip' report'. Print Edition | Subscribe