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Chinese engineer convicted of conspiring to illegally export semiconductor chips to China

A part-time resident of Los Angeles, Yi-Chi Shih was found guilty of multiple charges and faces a statutory maximum sentence of 219 years in federal prison. His six-week trial ended-on June 26, the department said in a statement on Tuesday.

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Washington Published on: July 03, 2019 8:25 IST
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Chinese engineer convicted of conspiring to illegally export semiconductor chips to China

A 64-year-old Chinese electrical engineer has been convicted by a US Court for his role in a scheme to illegally export sensitive electronics, including semiconductors chips with missile guidance applications, to China, the Department of Justice has said.

A part-time resident of Los Angeles, Yi-Chi Shih was found guilty of multiple charges and faces a statutory maximum sentence of 219 years in federal prison. His six-week trial ended-on June 26, the department said in a statement on Tuesday.

Yi-Chi's conviction comes amid heightened scrutiny of Chinese academics on American campuses, part mistrust between China and the US, which has accused Beijing of industrial and economic espionage.

In addition to the illegal exports, the jury also found Yi-Chi guilty of mail fraud, wire fraud, subscribing to a false tax return, making false statements to a government agency and conspiracy to gain unauthorised access to a protected computer to obtain information. 

Yi-Chi was convicted of all 18 counts in a federal grand jury indictment, the department said in the statement.

US District Judge Kronstadt, who presided over a trial that spanned seven weeks in Los Angeles, on Monday decided that he will later consider the forfeiture allegations in the indictment, where the government is seeking that Yi-Chi should forfeit hundreds of thousands of dollars. 

Judge Kronstadt discharged the jury that previously had been scheduled Tuesday to consider forfeiture allegations against Shih.

Assistant Attorney General John Demers said the department's China Initiative is focused on preventing and prosecuting thefts of American technology and intellectual property for the benefit of Beijing. 

"The defendant has been found guilty of conspiring to export sensitive semiconductor chips with military applications to China," he added.

Yi-Chi also lied about the exports to the federal authorities.

"Yi-Chi schemed to export to China semiconductors with military and civilian uses, then he lied about it to the federal authorities and failed to report income generated by the scheme on his tax returns," United States Attorney Nick Hanna said.

According to the evidence presented at the trial, Yi-Chi and co-defendant Kiet Ahn Mai, 65, of Pasadena, California, conspired to illegally provide the former with unauthorised access to a protected computer of a United States company that manufactured wide-band, high-power semiconductor chips known as monolithic microwave integrated circuits (MMICs).

Yi-Chi defrauded the US company out of its proprietary, export-controlled items, including its design services for MMICs, according to trial evidence. 
As part of the scheme, Yi-Chi accessed the victim company's computer systems through its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States. 

According to the Department of Justice, Yi-Chi and Mai concealed Yi-Chi’s true intent to transfer the US company’s products to China.  The MMICs that Yi-Chi sent to China required a license from the Commerce department before being exported to China . However, the license was never sought or obtained for this export.

These semiconductor chips have a number of commercial and military applications, and its customers include the Air Force, the Navy and the Defense Advanced Research Projects Agency.

MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications, the Justice department said in the statement.

These semiconductor chips were shipped to Chengdu GaStone Technology Company (CGTC), a Chinese company that was building a MMIC manufacturing facility in Chengdu. 

Yi-Chi was the president of CGTC, which in 2014 was placed on the Commerce Department’s Entity List, according to the court documents, “due to its involvement in activities contrary to the national security and foreign policy interest of the US. 

Yi-Chi used a Hollywood Hills-based company he controlled – Pullman Lane Productions LLC – to funnel funds provided by Chinese entities to finance the manufacturing of MMICs by the victim company, the statement said. 

Pullman Lane received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC “on the basis of its involvement in activities contrary to the national security and foreign policy interests of the US,” according to the court documents.

Yi-Chi and Mai were indicted in this case in January 2018. Mai pleaded guilty in December 2018 to one felony count of smuggling and is scheduled to be sentenced on September 19, at which time he will face a statutory maximum sentence of 10 years in federal prison.

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