One Canadian and Two Americans Charged With Stealing Military Technology for China

Scheme to export computer chips from American company exposed
January 29, 2018 Updated: June 17, 2019

Amid growing evidence of China’s ambitions to develop advanced technology for military use, two American citizens were recently arrested on charges of scheming to steal military technology from an American company to export to China. A Canadian citizen has also been charged in relation to the scheme. 

According to a press release issued by the Department of Justice (DOJ) on Jan. 23, Yi-Chi Shih, 62, and Kiet Ahn Mai, 63, naturalized U.S. citizens from Taiwan and Vietnam respectively, had conspired to pose as domestic customers to buy computer chips from an unnamed American company, then export the chips to a Chinese company called Chengdu GaStone Technology Co.

In 2014, the Department of Commerce placed Chengdu GaStone on the list of foreign companies that require a special license for export, “due to its involvement in activities contrary to the national security and foreign policy interest of the United States—specifically, that it had been involved in the illicit procurement of commodities and technologies for unauthorized military end use in China,” according to the affidavit filed by U.S. authorities and cited in the release.

Neither of them tried to obtain the license required for exporting the chips, known as monolithic microwave integrated circuits (MMICs), which are used in electronic warfare and radar systems. The American company counted among its clients the Air Force, Navy, and the Defense Advanced Research Projects Agency.

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Semiconductors on a circuit board that powers a Samsung video camera at a Samsung event in San Jose, California on March 23, 2011. (Justin Sullivan/Getty Images)

The scheme went thusly: Money for buying the chips was funneled from Chinese entities to Shih’s Los Angeles-based Pullman Lane Productions, LLC. Then, they used Mai’s own company, MicroEx Engineering, to act as a customer to order and pay for the manufacturing of the chips that Shih then illegally exported to Chengdu GaStone in China, according to the DOJ. 

On Jan. 25, Canadian press reported that Ishiang Shih, a Canadian engineering professor at McGill University and Yi-Chi Shih’s brother, was also involved in the case. Yi-Chi Shih is also a professor of engineering at UCLA. Money was transferred from Yi-Chi Shih to a company in Canada registered in his brother’s name, according to a report by the Montreal Gazette. His brother also received a mailed shipment that was connected to the case.

U.S. authorities also tracked Yi-Chi Shih’s travels and discovered that he made trips to Montreal and China several times during a 10 year period.

La Presse, a Montreal-based French newspaper, reached out to Ishiang Shih, who denied the allegations and said he was finding a lawyer.

The Chinese regime has made significant investments in military technology for over decades. Its navy, for example, successfully tested an advanced aircraft carrier in December 2017 using semiconductor technology from a British company it had acquired a decade ago.

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Type 001A, China’s second aircraft carrier, during a launch ceremony at the Dalian shipyard in Dalian, northeast China’s Liaoning Province, on April 26, 2017. (STR/AFP/Getty Images)

The regime also announced its goal of becoming the world’s leader in artificial intelligence (AI). A report by the Center for a New American Security (CNAS) published in November 2017 outlined how China sought to gain an advantage over the United States through AI technology used to modernize its military.

On Jan. 25, the Chinese military publication, the People’s Liberation Army Daily, announced that it had recruited more than 120 researchers from the military to join the army’s research institute, the Academy of Military Science, for the purpose of developing “top-rated” military technology.

The researchers are highly specialized in fields like unmanned smart equipment and quantum technology, according to the report. More than 95 percent have doctorate degrees.

This zeal will continue uninhibited until at least 2030, the timeline the Chinese regime has set for becoming the world’s top AI innovator.

The CNAS report warned the United States to be prepared for such a competitor. “China is no longer in a position of technological inferiority but rather sees itself as close to catching up with and overtaking the United States in AI,” the report said.

The U.S. should thus find ways to sustain its competitive advantages, such as the country’s wealth of talent, the report concluded.

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