A recent report revealed one of the most troubling examples of Chinese espionage targeting the U.S., or more specifically, U.S. companies. It all begin to unravel when Amazon starting looking into acquiring a company called Elemental Technologies.
This company was suppose to help Amazon expand its video streaming service known as Amazon Prime Video. While conducting its due diligence, Amazon dug into the massive servers used by Elemental for video compression.
Another company called SuperMicro, a San Jose, CA based company is a huge player in building motherboards for servers and assembled the servers for Elemental Technologies.
The scary thing is, during the due diligence process, an examination of the servers from SuperMicro revealed the servers’ motherboards contained a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design.
During more testing it was discovered that the tiny microchip gave hackers stealth access to any network connected to the altered servers.
To make matters worse, Elemental’s servers were also used by the Department of Defense data centers and the onboard networks of Navy warships.
Of course, at this point, the U.S. government was heavily involved in tracing the source of these microchips, which ultimately had been inserted into the motherboards by sub-contractors in China.
The fact is, this is exactly the type of spying that any country would relish the opportunity to carry out. China manufacturers roughly 75% of the worlds cell phones and about 90% of computers.
In other words, adding an extra microchip would be simple to do during manufacturing, yet very difficult for other countries to detect.
A subsequent investigation by U.S. officials revealed that these hidden microchips targeted over 30 major U.S. companies including Amazon and Apple.
Officials believe that China was interested in high-value corporate secrets and government data and not so much customer or individual data.
The ramifications of the attack by the Chinese will continue to play out, especially with the Trump administration focusing on trade with China.
In fact, during the latest round of trade negotiations the President discussed sanctions related to computer and networking hardware, suggesting U.S. companies may want to look for other manufacturers of these parts outside of China.
The trade war with China has been on going since Trump took office and here are some ways these issues could potentially affect the average American.
Cost of goods.
With the ongoing trade war between the U.S. and China, many Americans may start to see small price increases in goods from China beginning around the New Year.
To make matters worse, with the fear of China compromising the manufacturing process, some U.S. companies will no doubt look elsewhere to have products made.
Of course, this won’t happen overnight, but if a U.S. company decided to bring their manufacturing back to America or even another country, then we could see a noticeable increase in the price we pay for many things, especially electronics.
Stock market slump.
There is no question that the trade disagreements between the U.S. and China have impacted the global markets. When you have two world powers trading tariffs it’s going to slow economic growth.
So far, only certain areas of the stock market have been affected by the trade war, largely the aluminum and steel industries, which were directly targeted for tariffs by China.
The thing is, you will want to pay closer attention to these types of stocks as well as the future trade talks between the countries.
Essentially, before doing any investing you want to make sure your stocks aren’t going to fall under the targeted industry of new tariffs.
Simply put, it’s not feasible to completely separate form China and purchase our goods elsewhere.
However, we should consider the risk of buying things from China and find ways to continue to put pressure on the Chinese government not to be so crooked.
In other words, this is where a trade war will continue until China starts playing by the rules.
Clearly, there is no end in sight to the back and fourth spying and trading between the U.S. and China. The best thing you can do is to prepare to be less dependent on the economy as a whole.
What I mean is, even though the U.S. economy appears strong right now, you should always be prepared for a plunge and to be able to be self-reliant when it happens.
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