Engineer found guilty of smuggling military-grade chips from the US to China

The US Department of Justice has convicted Shih Yi-chi, an electrical engineer and former academic, over illegal exports of US-made silicon with potential missile guidance applications to China.

Shih could be sentenced to up to 219 years in prison, but plans to appeal the decision.

"It was a major miscarriage of justice," his lawyer, James Spertus, told South China Morning Post. "Shih got caught in a trade war he had nothing to do with."

Spertus also identified the alleged victim as Cree, a major American chip designer known primarily for its LED technology.

Shih is a 64-year old Chinese-American, a former adjunct professor of engineering at UCLA and a former president of Chinese semiconductor maker Chengdu GaStone Technology Company (CGTC) - which was put on the Commerce Department's "Entity List" in 2014, due to its involvement in "activities contrary to the national security and foreign policy interest of the United States."

According to evidence presented at the trial, Shih and his 65-year-old co-defendant Kiet Ahn Mai conspired to obtain unauthorized access to systems of a US company that manufactured wide-band, high-power chips known as monolithic microwave integrated circuits (MMICs) - which fall under restricted exports.

Military hardware

As well as civilian applications, these chips are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications.

The DoJ claimed Shih got access to the chipmaker's systems after Mai pretended to be a domestic customer, seeking to obtain custom MMICs for use within the US.

The resulting chips were then allegedly shipped to CGTC, which, conveniently enough, was building a MMIC manufacturing facility in Chengdu. The effort was allegedly funded by a company controlled by Shih, called Pullman Lane Productions LLC - which received its funding from an unnamed company in Beijing and was also on the Entity List.

Shih was found guilty on 18 counts after a six-week jury trial in the US District Court for the Southern District of California. Among other things, he has been convicted of making false statements to a government agency, mail and wire fraud, filing false tax returns, and most importantly, violating a federal law barring exports of certain materials to China.

"This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns," said US attorney Nick Hanna.

"My office will enforce laws that protect our nation’s intellectual property from being used to benefit foreign adversaries who may compromise our national security."

Shih's defence denied he had ever sent chips to China. As well as a lengthy prison term, he faces the forfeiture of hundreds of thousands of dollars in assets, according to court documents.

Shih's partner in crime pled guilty in December 2018 to one count of smuggling and the Pasadena resident is scheduled to be sentenced in September, facing a maximum stint of 10 years in prison. ®