Posted on 10/04/2018 10:53:00 PM PDT by Zhang Fei
Bloomberg link only.
They were completed banned from selling in the United States until Obama.
I’m sorry to hear about your loss. The Chinese are in it to win, and they do not abide by Western ideal of good business. I think Chinese “cheating” is one of the main reasons why Trump won. Powerful people are selling out their fellow Americans on both trade and immigration. It has to be stopped, or there really will be just a few Americans at the top and the rest impoverished.
When/how did Bloomburg get a spine re China?
Most US media is very deferential to China since their revenue from advertising is dependent on China manufactured goods.
[When/how did Bloomburg get a spine re China?
Most US media is very deferential to China since their revenue from advertising is dependent on China manufactured goods.]
Bloomberg is an exception. It makes no movies or scripted TV shows, and its bread-and-butter is financial terminals providing proprietary data that cost $24,000 each annually. Because they are an indispensable tool of the trade, they are installed in China as well. But at last count, at 5,500 out of 325,000 total installed terminals, the Chinese segment was a blip. And Michael Bloomberg is Bloomberg LP’s 88% controlling shareholder. He is worth $50b and probably doesn’t care about what the Party thinks all that much, except perhaps as it relates to the safety of his reporters and news sources inside China.
Any and all large, influential or vital companies in China are connected with the Chinese government. Even if (or especially if) they are ostensibly private.
Control is hard-wired into the DNA of the Chinese Communist Party.
Huawei’s boss may or may not be a spy. Huawei may or may not steal technology. It doesn’t matter. It dances to whatever tune the Chinese government wants, to support power and control of the CCP and Chinese government.
It is impossible that it is otherwise in China.
Successfully getting away with theft and screwing your customers and competition is to be admired in Chinese culture
Both Apple and Amazon found the surreptitious chip hidden on motherboards they were buying from Elemental Systems/Supermicro, a server assembler who bought hardware from Supermicro which had its motherboards made in China by a generic subcontractor. Apple was going to buy 30,000 rack mount high-speed broadband video servers from Elemental Systems in 2015-2016 for their iCloud/iTunes streaming movie service and, like Amazon got some reference sample machines for teardown testing. Per Bloomberg Businessnews:
"One official says investigators found that it eventually affected almost 30 companies, including a major bank, government contractors, and the world’s most valuable company, Apple Inc. Apple was an important Supermicro customer and had planned to order more than 30,000 of its servers in two years for a new global network of data centers. Three senior insiders at Apple say that in the summer of 2015, it, too, found malicious chips on Supermicro motherboards. Apple severed ties with Supermicro the next year."
From what I can see, Apple cancelled that order and went with another supplier, one without a Supermicro motherboard. However Amazon went ahead and acquired the entire company of Elemental Systems in 2015 and bought Supermicro motherboards, subsuming them into the Amazon structure under Amazon Web Services (AWS). Apple may actually have cancelled that order because Amazon acquired Elemental and Supermicro was going to dedicate their production and the Elemental software to their purposes for expansion of AWS and Amazon Prime video which was growing rapidly.
All three companies deny there was ever a problem, denying the single source Bloomberg businessnews story which, as a MSM news source, is as usual citing anonymous sources at the companies and in government for their story . . . saying, . . “It’s untrue that AWS knew about a supply chain compromise, an issue with malicious chips, or hardware modifications when acquiring Elemental,” Amazon wrote. “On this we can be very clear: Apple has never found malicious chips, ‘hardware manipulations’ or vulnerabilities purposely planted in any server,” Apple wrote. “We remain unaware of any such investigation,” wrote a spokesman for Supermicro, Perry Hayes.
Apple and Amazon further stated today as quoted in a CNBC article:
“Apple has issued strong denials of the report, stating: ‘We are deeply disappointed that in their dealings with us, Bloomberg‘s reporters have not been open to the possibility that they or their sources might be wrong or misinformed. 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,'” Fazzini reports. “AWS has also denied the report according to a statement published by Bloomberg, saying: ‘We’ve found no evidence to support claims of malicious chips or hardware modifications.'”
AWS has also denied the report, telling CNBC in a statement,
"As we shared with Bloomberg BusinessWeek multiple times over the last couple months, at no time, past or present, have we ever found any issues relating to modified hardware or malicious chips in SuperMicro motherboards in any Elemental or Amazon systems."
As I pointed out in the Q LexiQn on this claim, Apple designs its own logic boards with the boards being multi layered, making the inclusion of an additional chip a not inconsequential proposition, requiring a re-engineering of the entire board to accommodate the new addition. Apple is also fully in charge of their own quality control for their products, with a detailed computerized comparison done on every logic board to assure that it matches specifications when it comes out of manufacture. In addition, Apple designs each of the processors and many of the ICs on their mobile devices as Systems on a Chip (SoC) by hand, not computer designed, and it would be nearly impossible for any Chinese agency to add something to a chip (it would have to be done at the design stage). Any surreptitiously added IC would raise a red flag in the quality control checks done on every Apple product. Also, Apple does not use third-party reference design motherboards as do many PC manufacturers, who often buy parts such as motherboards and logic boards from multiple suppliers of which there are many such generic makers in China.
The fact is that most motherboards these days are also multilayer and must be engineered from day one with all intended chips in mind. Just adding one at the point of manufacture is not really possible unless it was designed to be there from the beginning. You can't just change the motherboard design at the last minute to stitch another IC on it. Not one of these articles shows a photo of the suspect chip in situ. Something smells here! That's a red flag for me. Don't tell me it's there, show me the damn thing! That said, Apple and its supply partners all took a stock hit today due to this article. . . which given its single source nature from Bloomberg and anonymous sources for quotations, with denials from the principal companies involved, may in fact be FAKE NEWS.
It is one thing to be in it to win, another to be in it to make mass surveillance of Americans and maybe killing them. THe Supermicro flap is no joke
Unbox Therapy, Huawei episodes:
http://www.google.com/search?q=unbox+therapy+huawei&ie=ISO-8859-1&hl=en&source=hp&gbv=1
The article talks about how Huawei got all of Nortel’s technology through a Chinese hack. As a former Nortel shareholder who lost his entire investment, I’d like to see Huawei reduced to ashes.
...
Right there with you, bro...my whole 401k...
So while Nortel vender out to Penag, Ireland, China, they stole it all...
And those tiny spy PCBs are likely in everything!!!
Until they show me this chip in place on the motherboard and show the breakout of its capabilities, all we have is a single source assertion from a main stream media source citing anonymous sources, and the three named companies, two of which are the two largest in the world by market cap, and a now penny stock company, all officially saying it did not happen. The two huge companies are saying it under threat of severe penalties from the Sarbanes Oxley Act of 2002, where if they are lying, the management face personal fines of from $10 million to $20 million and 10 to 20 years in federal prison. SOX is nothing to sneeze at.
Show me that chip in situ, not perched on a finger as Bloomberg is, or it's FAKE NEWS!
Apple was going to use the hardware in their iTunes Streaming video/movie service they were installing back in 2015-2016 order 30,000 rack mounted servers from Elemental Systems who had their servers made by Supermicro. However, even Bloomberg BusinessNews states that Apple cancelled the order when their engineers discovered the malicious IC chip on the motherboard of test units they received.
The more I think about this the less sense it makes for several very good reasons.
You don’t know a dang thing about SOX.
SOX requires the president of a company to sign off on the accuracy of the financial data—not that they had an embedded circuit that was secretly added by suppliers in China.
Get over yourself, inflated ego.
You may be thinking only about the accounting aspects of SOX, there are other sections, one having to do with communications and another with evidence.
The CEO, president, and other officers of a corporation (I know, I've held each of those positions in corporations) has always had a fiduciary responsibility that the financial statements of a corporation were true and accurate and not fraudulent. . . SOX made no change in that except to criminalize and increase the penalties and add lower level managers. . . and management people and corporate officers have been convicted of SOX violations because communications have financial impacts on the valuation of the stocks. I've read the entire law. Have you? Communication that has to do with the truthfulness and transparency of any statement made by a publicly traded corporation that may negatively affect the value of the company is also part of Sarbanes Oxley. . . and this certainly would.
Would it surprise you to learn that Sarbanes Oxley was successfully used against the captain of a commercial fishing boat, certainly NOT the president of the company, for "shredding" some undersized red grouper fish (actually throwing the undersized live red groupers back into the sea, as the law required). He was convicted under a SOX provision that prohibited the "shredding" of any "tangible object" that might be used in a Federal Sarbanes Oxley investigation, as an inspector had decided the red grouper were slightly undersized and ordered they be brought back to shore for further measurement (these 72 groupers out of several thousand, were a fraction of an inch under the 20" size the law required, according to the enforcement officer) as evidence of undersize fishing, rather than being just tossed back as the law required of undersized fish. Really, SOX applied to a low-level manager? Yup, they did. That one made it all the way to the US Supreme Court.
SOX was also invoked on a company for making the statement that it was legal to import crabs in burlap sacks not boxes. . . (it actually was). . . Legal costs pushed the company into bankruptcy from which it did not recover.
They have also applied SOX to corporate statements or communications by officers or managers that were later found to be deliberately false that had negative impact on stock valuation.
Sarbanes Oxley was absurdly invoked in the Boston Marathon Bombing case against the roommate of one of the bombers for merely moving a backpack from his room. . . and it includes ANOTHER fisherman case. . . Such is the overreach of Federal Prosecutors and their eagerness to read into SOX because of its poorly written sections.
It is one of the reasons that Apple seldom responds to any requests for comments on what it is doing. It is better to stand mute than to risk saying something that later can be challenged when Apple changes its corporate mind about something and is then accused of lying under SOX. Yet HERE both Apple and Amazon made official statements of fact.
Sarbanes Oxley does not apply to just the "president" of a company signing off on financial statements, but to all officers and management of a company and official communications of that company. The test is did the statement or the communications have a negative impact on the valuation of the stock due to misrepresentation or falsehood of what they said or communicated. SOX has been interpreted to mean going beyond normal product puffing, etc., to deliberate misrepresentation of factual data.
I.E. A false statement CAN have an intentional financial impact that benefits the company or the utterer to the fraudulent detriment of the investors. If that can be proved to be the case, then Sarbanes Oxley can be invoked against the company or the individual manager or officer. . . and has been.
In this instance, as I stated above, Apple and Amazon have released OFFICIAL statements on the FACTS about the Supermicro servers. In Apple's case on servers they would have been using had they NOT cancelled the order; on AWS' case on Supermicro servers they ARE using. Those facts COULD significantly impact the valuation of each company's stock and in fact HAS so impacted stock valuation and the stock of their supply chains. . . In Apple's case AAPL lost almost 3% ($30 BILLION in valuation) after Bloomberg's article came out and their supply chain lost over $10 BILLION of value in just one day, all on the say-so of unattributed anonymous sources from a single news source with a history of FAKE NEWS! I repeat, what incentive would Apple and Amazon have to lie?
You can tell the quality of your argument when you devolved to argument ad hominem with the "inflated ego" attack. Not even a good try.
Idiot, I was a SOX auditor for years for multiple companies.
Apple Suppliers Took an $18 Billion Stock Hit After the China Hacking Report
Barrons
By Al Root
Updated Oct. 5, 2018 4:45 a.m. ETThursday’s report from Bloomberg Businessweek that Chinese chips were installed in the hardware of companies like Apple and Amazon.com could have significant implications for tech supply chains.
Consider: Apple (ticker: AAPL) is a $1 trillion company, and its hardware supply chain amounts to another trillion or so in market cap. Those companies have about $1 trillion in assets listed on the books. Though it’s difficult to get precise numbers, Apple’s suppliers domiciled outside Southeast Asia probably own about $300 billion in assets there.
For instance, Intel (INTC) lists 15% of assets in “other locations” outside of the U.S., Europe, and Israel. Presumably, those assets are in Southeast Asia, but Intel’s filings don’t provide the details. If the security zeitgeist begins to require more technology production to be done in the U.S., the implied shift in capital spending by the region could be material.
The market, however, has taken just $18 billion or so in value from the hardware suppliers since the story broke earlier today, with Taiwan Semiconductor Manufacturing (TSM), down 3.5% to $42.43, among the hardest hit. To put that in perspective, Equifax (EFX) remains down about 12% from its all-time high, presumably because of the impact from its September 2017 data breach.
There are good reasons not to jump to conclusions. Apple and Amazon (AMZN) are denying the reports, and the market might be having a difficult time pinpointing who’s to blame. It’s not entirely clear which point of the chain was breached and just how much it will hurt suppliers. We can also envision a scenario where this hack turns into a bargaining chip for the U.S. during trade negotiations with China. Still, that less-than-2% stock value hit could be too small, given the implications of the news.
There are still more questions than answers. But the issue is sure to become a hot topic during the coming third-quarter earnings season.
If this is fake news, it’s a massively impactful story that will cause major lawsuits.
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