United States—Have Chinese hackers managed to infiltrate miniature chips in our computers?

According to a breaking story from Bloomberg News, special agents from the People’s Liberation Army have been consistently implanting minuscule chips (smaller than a grain of sand) into computer hardware manufactured by the Chinese company Supermicro for U.S. tech giants, like Apple and Amazon, and even for the U.S. defence community.

Apple, however, has been most vigorously denying the allegations. A company spokesperson expressed his disappointment with Bloomberg’s reports and sources. He added, “Our best guess is that they are confusing their story with a previously reported 2016 incident in which we discovered an infected driver on a single Super Micro server in one of our labs. That one-time event was determined to be accidental and not a targeted attack against Apple.”

But what would such a hack mean?

It would mean that Chinese hackers would be able to read private messages and emails sent through Apple’s cloud service. It would mean that DoD computers may be shut down at a very inconvenient moment. It would mean complete chaos in the event of a conflict with China.

The reports’ veracity notwithstanding, China could orchestrate such a scheme. Chinese factories account for close to 90 percent of the globe’s computer devices and 75 percent of its cellphones. The current administration has repeatedly raised the issue with Apple. Profit, however, seems more enticing than potentially jeopardising national security.

If the reports are indeed true, this could be the moment that China lost its position as the world’s pioneer technology manufacturer. Which country or company would now trust Chinese factories with their products? The consequence for the tech companies is bound to be significant. The appeal of seconding production to China is because it’s cost efficient: Chinese workers slave for relentless hours and are paid awfully low salaries. Chinese regulations are also quite convenient for companies. If, however, tech giants bring back their production chains, the costs of an iPhone or of the latest Mac will spike.

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Apple and Amazon have been backed up by both the U.S. and foreign governments. A representative from the British National Cyber Security Centre (NCSC), which is part of the GCHQ, Britain’s signal intelligence agency, acknowledged Bloomberg’s report but stressed that “at this stage have no reason to doubt the detailed assessments made by AWS and Apple. The NCSC engages confidentially with security researchers and urges anybody with credible intelligence about these reports to contact us.”

An official from the Depart of Homeland Security echoed the British spooks saying, “…at this time, we have no reason to doubt the statements from the companies named in the story.”

Apple, in response to the allegations, published a thorough article on its website, titled “What Businessweek got wrong about Apple,” that painstakingly describes how Businessweek and Bloomberg are wrong. Furthermore, the tech giant issued an announcement:

“As we have previously informed Bloomberg, this is completely untrue. Apple has never found malicious chips in our servers. Finally, in response to questions we have received from other news organisations since Businessweek published its story, we are not under any kind of gag order or other confidentiality obligations.”

Who is to be trusted, however? It would be reasonable for the companies to deny any wrongdoing. That could buy them time to do necessary damage assessment and shield their stocks from crumbling. Bloomberg and Businessweek, on the other hand, wouldn’t publish such a story without being absolutely certain of its accuracy. No one can deny that Chinese hackers have been targeting the U.S. public and private sectors to gain a strategic, commercial, and technological advantage. But could it be so bad?