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Two US computer engineers charged with espionage

Seeking to sell chip designs to Chinese military

Internet Security Threat Report 2014

A US federal grand jury has charged two computer engineers with stealing microchip designs to sell to the Chinese military.

California residents Yuefei Ge, 34, of San Jose and Lan Lee, 42 of Palo Alto have been indicted under charges of conspiracy, economic espionage and theft of trade secrets.

The two men are accused of creating a Delaware corporation called SICO Microsystems to obtain venture capital to sell products based on trade secrets stolen from NetLogic Microsystems and Taiwan Semi-Conductor Manufacturing Company (TSMC). The company allegedly secured backing from two Chinese government funds.

Most of the evidence against the two men were obtained from their home computers.

According to the indictment, Lee downloaded TSMC chip technology from a Netlogics internal server and installed it on his home computer. Ge is accused of installing sensitive Netlogics data sheets onto his PC.

While the original sealed indictment dated June 15, 2006 makes no mention of Chinese government involvement, a new indictment filed yesterday claims the men obtained funding from China's 863 program and The General Armaments Department (GAD) of the People's Liberation Army.

The 863 program is a funding plan created and operated by the People's Republic of China. The program is designed by leading Chinese scientists to develop and encourage the creation of technology in China, focusing on communications and laser technology for military applications. The GAD of the People's Liberation Army is responsible for Army, Navy and Air Force in China, and is a major user of the 863 program.

According to the accusations, Lee had a document titled "SICO Executive Summary" on his home PC which stated the purpose of his business plan was to bid on a coprocessor project on the 863 plan. Both men's PCs had letters to a "Professor Jiang" in China dated June 29, 2002 discussing potential SICO products and "enclosing the employment offer for the '863' program (SRAM and Flash Memory) consultant from Qinghua University along with the business plan..." Justice officials say they sought $3.6m from the 863 Program or other departments.

Lee also allegedly possessed a document on his computer dated March 31, 2003, comprising 18 questions and answers regarding negotiations between SICO and the GAD, assuring him that the Chinese government and army are "not that scary," and that "[t]hey are only help and support, and satisfy our needs."

The two men had been released on the original indictment on $300,000 bail. They are scheduled for a October 29 court appearance for the latest indictment.

If found guilty, the two men face up to 25 years in prison and a $750,000 fine. Officials said Netlogic and TMSC cooperated in the investigation. ®

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