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 TIME on politics Congressional Quarterly CNN/AllPolitics CNN/AllPolitics - Storypage, with TIME and Congressional Quarterly

High Performance Computers

page 7

New World Transtechnology

On December 20, 1996, New World Transtechnology of Galveston, Texas, pled guilty to charges that it violated the export control laws and engaged in false statements by illegally exporting controlled computers to a nuclear equipment factory in the PRC in August 1992. The company was also charged with attempting to illegally export an additional computer to the PRC through Hong Kong in October 1992. The company was sentenced to pay a $10,000 criminal fine and a $600 special assessment fee.168

Compaq Computer Corporation

On April 18, 1997, the Commerce Department imposed a $55,000 civil penalty on Compaq Computer Corporation of Houston, Texas, for alleged violations of the Export Administration Regulations. The Commerce Department alleged that, on three separate occasions between September 17, 1992 and June 11, 1993, Compaq exported computer equipment from the United States to several countries, including the PRC, without obtaining required export licenses. Compaq agreed to pay the civil penalty to settle the allegations.169

Digital Creations

On June 12, 1997, Digital Creations Corporation of Closter, New Jersey, was sentenced to pay an $800,000 criminal fine for violating the Export Administration Act and Regulations in connection with exports of computers to the PRC. Digital had previously pled guilty in December 1994 to charges that it had violated the Export Administration Regulations by illegally exporting a Digital Equipment Corporation computer to the PRC without obtaining the required export license.170

Lansing Technologies Corporation

On June 17, 1997, Lansing Technologies Corporation, of Flushing, New York, pled guilty to charges that it violated the Export Administration Regulations in 1992 by exporting a Digital Equipment Corporation computer vector processor and a data acquisition control system to the PRC without obtaining the required export licenses from the Commerce Department.171

Other serious violations of HPC export control laws and regulations have occurred in recent years, but these concerned Russia. On July 31, 1998, for example, the Department of Justice announced that IBM East Europe/Asia Ltd. entered a guilty plea. IBM received the maximum allowable fine of $8.5 million for 17 counts of violating U.S. export laws through the sale of HPCs to a Russian nuclear weapons laboratory known as Arzamus-16. In another example, an ongoing U.S. Government investigation of Silicon Graphics Incorporated/Convex is examining whether a violation of law occurred in a sale of HPCs to another Russian nuclear weapons laboratory, Chelyabinsk-70.172

High Performance Computers at U.S. National Weapons Laboratories Are Targets for PRC Espionage

No other place in the world exceeds the computational power found within the U.S. national weapons laboratories. For this reason, both the computational power and the data it can generate have been the focus of the PRCís and other countriesí intelligence collection efforts.

The desire for access to this computing power and data, in turn, is one of the reasons so many foreign nationals want to visit the laboratories.

According to David Nokes, the network administrator at Los Alamos National Laboratory, all operating systems have vulnerabilities that can be exploited by a knowledgeable, valid user.173 Nokes also says that there are a few solutions to issues of HPC network security. These include:

    • Allowing only U.S. students to use the networks
    • Limiting physical access to high performance computer networks at universities
    • Enhancing physical security and security education at universities174

U.S. National Weapons Laboratories Have Failed to Obtain Required Export Licenses for Foreign High Performance Computer Use

When foreign nationals use the U.S. national weapons laboratoriesí HPCs, their activities should generally be considered "deemed exports." The "deemed export" rule [15 CFR 734.2 (b) (ii)] covers those situations in which an export-controlled technology or software-source code information is released to a visiting foreign national, for which a license would have been required. In such situations, an "export" is "deemed" to have occurred.

The Select Committee is concerned that HPC system managers in the U.S. national weapons laboratories lack an essential understanding of the deemed export rule. This lack of understanding was substantiated by interviews with representatives from the Department of Commerce who had no recollection of ever having seen an application for a deemed export from any of the U.S. national weapons laboratories.

When PRC nationals visit and use the HPCs at a U.S. national weapons laboratory, their access should be limited to the same computing capabilities to which the PRC itself is restricted, especially for military uses.175 The Select Committee discovered, however, that the laboratories do not even measure the computational power of their HPCs in MTOPS. Moreover, many of the laboratories have difficulty in converting to MTOPS from the units they use to measure the power of an HPC.

The Department of Commerce could not recall a laboratory ever having sought guidance on how to compute an HPCís MTOPS rating. Significantly, the Select Committee discovered that a rather modest HPC (by Department of Energy standards) in a U.S. National Laboratory used by foreign nationals had a substantially higher MTOPS rating than the controlled threshold. No licenses, however, had ever been obtained.

The "deemed export" rule also applies in those instances in which a PRC national or entity accesses an HPC remotely via the Internet.

In the absence of an effective audit system, which monitors the codes being run by the PRC user, the U.S. national weapons laboratories cannot verify that they are in compliance with the law, or that PLA or PRC intelligence is not using the HPCs for the design or testing of nuclear or other weapons.

PRC Students Have U.S. Citizen-Like Access To High Performance Computers at the National Weapons Laboratories

The U. S. national weapons laboratories rely upon nuclear weapons test simulation software and computers provided by the Accelerated Strategic Computer Initiative (ASCI). Five major U.S. universities support ASCI through the Academic Strategic Alliances Program (ASAP).

As a result, hundreds of research students and staff at these universities have access to the HPCs used by the national weapons laboratories for U.S. nuclear weapons research and testing. As many as 50 percent of these research students and staff are foreign nationals, some of whom may have foreign intelligence affiliations.

Holders of Immigration and Naturalization Service "green cards" ó PRC nationals who have declared their intent to remain permanently in the U.S. ó are treated as U.S. citizens for export control purposes. They are then given U.S. citizen-like HPC access, free to return to the PRC once their objectives are fulfilled.

In November 1998, the Secretary of Energy issued an Action Plan that includes a task force to review HPC usage by foreign nationals and provide a report to the Secretary within six months. The Department of Energy is currently preparing an implementation plan to address counterintelligence issues identified in a July 1998 report, entitled "Mapping the Future of the Department of Energyís Counterintelligence Program," including HPC usage by foreign nationals.

Many Types of Computer Technology Have Been Made Available to the PRC That Could Facilitate Running Programs of National Security Importance

One of the bases for the 1996 increase in export control thresholds was that individual PCs were widely available on the open market in the United States, but not able to be exported to the potentially huge PRC market.176 What was an HPC in 1993 (those capable of 195 or more MTOPS) was no longer even considered necessary to control for weapons proliferation concerns.177

By 1997, PCs and workstations assembled in the PRC captured approximately 60 percent of the PRCís domestic market.178 All of these locally-assembled computers used imported parts ó over 70 percent contained United States-produced Pentium microprocessors.179

Three of the largest manufacturers in the PRC were affiliates of IBM, Hewlett Packard, and Compaq, with a combined market share of approximately 21 percent.180 A large share (but probably not more than 20 percent) of the PC assembly in the PRC was done by small, independent assembly shops.181

The largest individual producer of PCs and workstations in the PRC is the Legend enterprise, a spin-off of the Chinese Academy of Sciences.182 This domestic computer assembly industry dovetails well with Beijingís overall plans for economic modernization. Beijing reportedly desires an independent PRC source of most high-technology items to avoid reliance on foreign providers for these goods.

To participate more fully in the PRC market, United States firms have been pressured by the PRC government to relinquish technological advantage for short-term market opportunities. The PRC requires that foreign firms be granted access to the PRC market only in exchange for transferring technology that would enable the state-run enterprises to eventually capture the home market and begin to compete internationally.

However, the PRCís strategy of coercing technology from foreign firms has not enabled state-run industries to close the technology gap with more developed nations. In the context of establishing domestic production of computers for sale in the PRC, this PRC "technology coercion" policy appears to have worked.183 The PRC now has a growing industrial base of small computer assemblers. For the most part, these companies are not State-run. The technology that was "coerced" from U.S. computer manufacturers as a cost of entering the PRC market apparently better serves the expansion needs of small, relatively independent enterprises and not the intended needs of central planners in Beijing.

90 percent of PRC consumers of PCs and workstations are business, government, and educational entities, with individual purchases accounting for only 10 percent of the PRCís PC market.184 To illustrate the size of the individual purchaser segment of the PRCís market, it is estimated that only 5 million individuals out of the PRCís 1.2 billion have the expendable funds required to purchase a low-end PC in the PRC.185

Despite the limited number of individual purchasers, the actual size of the PRC PC and workstation market was 2.18 million units in 1996; 3 million units in 1997; and 4.5 million units in 1998. It is anticipated the PRC PC and workstation market will grow at the rate of 1.5 million to 2 million units per year through the year 2000. According to figures provided by the Asia Technology Information Project, an independent research foundation, non-PRC manufacturers of PCs and workstations, including U.S. manufacturers, could expect to partake of a portion of the almost 2 million units expected to be imported for sale in the PRC in 1998.186

The PRC Has a Limited Capability to Produce High Performance Computers

The PRC has demonstrated the capability to produce an HPC using U.S.-origin microprocessors over the current threshold of 7,000 MTOPS. The PRC "unveiled" a 10,000 MTOPS HPC ó the Galaxy III ó in 1997 based on Western microprocessors.

But PRC HPC application software lags farther behind world levels than its HPC systems. Also, despite the existence of a few PRC-produced HPCs based on Western components, the PRC cannot cost effectively mass-produce HPCs currently. There really is no domestic HPC industry in the PRC today.

While it is difficult to ascertain the full measure of HPC resources that have been made available to the PRC from all sources, available data indicates that U.S. HPCs dominate the market in the PRC.187

Although the PRC has a large market for workstations and high-end servers, there is a smaller market for parallel computers which is entirely dominated by non-PRC companies such as IBM, Silicon Graphics/Cray, and the Japanese NEC. However, there continues to be significant market resistance to Japanese HPC products in Asia, especially as U.S. products are beginning to have significant market penetration.188

Back  |  Forward


pages 1 | 2 | 3 | 4

PRC Acquisition of U.S. Technology
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

PRC Theft of U.S. Nuclear Warhead Design Information
pages 1 | 2 | 3 | 4 | 5

High Performance Computers
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

PRC Missile and Space Forces
pages 1 | 2 | 3 | 4 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Hughes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Loral
pages 1 | 2 | 3 | 4 | 5 | 6

Launch Site Security in the PRC
pages 1 | 2 | 3 | 4 5 | 6

Commercial Space Insurance
pages 1 | 2 | 3 | 4

U.S. Export Policy Toward the PRC
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Manufacturing Processes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

pages 1 | 2 | 3

pages introduction | A | B | C | D | E | F

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