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High Performance Computers

page 8

U.S. High Performance Computer Exports To the PRC Are Increasing Dramatically

A review of Commerce Department information regarding the total of HPC license applications that were received for the time frame January 1, 1992 to September 23, 1997, revealed the following:

    • Only one HPC export license to Hong Kong (with a value of $300,000) was rejected
    • 100 HPC export licenses to the PRC (with a total value of $11,831,140) were rejected by Commerce
    • 37 HPC export licenses to Hong Kong (with a total value of $55,879,177) were approved
    • 23 HPC export licenses to the PRC for HPCs within the 2,000 to 7,000 MTOPS range (with a total value of $28,067,626) were approved
    • Two of the 23 HPC export licenses to the PRC for HPCs within the 11,000 to 12,800 MTOPS range (with a total value of $2,550,000) were approved in 1998189

The approximate total value of the HPCs exported, of whatever description, to both Hong Kong and the PRC, for the six-year period ending September 23, 1997, was only $86 million.190

The nine-month period between January 1998 and September 1998, however, saw U.S. exporters notify the Commerce Department of their intention to export 434 HPCs (in the 2,000 to 7,000 MTOPS range) to the PRC (total value $96,882,799).191 Nine times the number of HPCs were exported in one-ninth the time.192

During approximately the same time frame (calendar year 1998) it is estimated that 9,680,000 individual PCs and workstations were sold in the PRC. The market share that U.S. exporters could reasonably expect to benefit from was approximately 3,872,000 units, worth approximately $1.8 billion.193

Apparently, the proximate cause of U.S. computer manufacturers aggressively lobbying for the raising and maintaining of export thresholds above the PC level was to capture this $1.8 billion per year market share.

The United States dominates the PRCís HPC market, but U.S. exports clearly do not dominate the PRCís personal computer and workstation market.194 The difference between the 460-unit, $100 million HPC market described above, stretched over a six-year period, and the yearly three million-unit PC and workstation market, with a value of $1.8 billion, is dramatic.

The performance levels of U.S. HPCs reported to be exported to the PRC over the past year continued to be predominantly in lower-end machines, as shown in the following table. For example, 77 percent of U.S. HPCs (a total of 388 machines) have performance levels below 4,000 MTOPS.

 

Number of U.S. HPCs Reported to Be Exported to the PRC Under License Exception, by MTOPS195 September 1997 - September 1998

MTOPS Total

2,000 to 2,999 302

3,000 to 3,999 86

4,000 to 4,999 71

5,000 to 5,999 28

6,000 to 6,999 15

> 7,000 0

Total 502

 

The PRC Is Obtaining Software From U.S. and Domestic Sources

In June 1997, it was estimated that 96 percent of software programs sold in the PRC were pirated versions of commercially available U.S. programs. These programs were designed for use on PCs and workstations, and are not considered useful for the very sophisticated programming done on HPCs.

Some major U.S. software producers have begun contracting with PRC programming firms. These PRC software firms are comprised of recently-graduated PRC university students. They are attempting to write programs in Chinese to capitalize on a huge domestic market.196

Two factors mitigate against the success of the PRC developing its domestic programming industry.

The first factor is that street-level "software pirates" sell dozens of U.S. computer programs at a time on one CD-ROM for a small fee (reportedly $20). In other words, one can meet most or all of oneís programming needs in the PRC for a nominal fee. It is anticipated that it will be difficult, if not impossible, for a domestic software industry to recoup the start up costs associated with just one software program, let alone the dozens needed to compete with the street level dealers.

The second factor is that these pirated U.S.-produced, English language programs are more mature, widespread, and robust than PRC programs.197 It is axiomatic that any new product will have "bugs in the system." It is considered unlikely that new, unproven, and possibly weak software programs will effectively compete with cheap, proven, and robust software that is widely available at such nominal fees. It is conceivable that the PRC will abandon instituting a domestic programming industry altogether.198

Potential Methods of Improving End-Use Verification

According to a 1996 RAND study, there are non-intrusive and intrusive approaches to assessing the manner in which a buyer is actually applying dual-use technologies. Among the non-intrusive methods are:

    • Memoranda of understanding and agreements
    • National technical means of verification
    • Limitations designed into the transferred technologies
    • Transparency measures

Among the intrusive methods are:

    • Inspections
    • Tagging199

Tagging

Tagging is achieved by attaching an active system to the item that is to be exported, rather than just a passive tag for identification during an inspection. The active system would both monitor the object tagged and communicate that information back to the United States. The RAND study noted that in practice, this means the objects to be tagged must be physically large systems, such as a machine-tool cell, or a major component of some larger system, such as a turbine engine in a helicopter.200

According to the RAND study, the tag should be capable of at least communicating information about the itemís physical location. Some sensors may provide other kinds of information, as well. The information could be communicated to a satellite or over a data link. Early versions of such devices were already in use in 1996 to monitor nuclear materials and technologies.201

These "smart" tags exploit the potential of several technologies, according to the RAND study. They combine encryption, the Global Positioning System, and emerging global wireless communications systems, such as Iridium or Orbcomm. These technologies would allow the tags to report back on the status and location of the tagged object. In principle, such tags could report the position of an object at any given time in order to verify limitations on their location. Such tags could also report on the activities of a "smart" system to which they are attached. For example, a machine-tool cell could report whether the machine had been used to make parts resembling aircraft components.202

Such tags could have many applications in a cooperative regime. Their application and use in a prohibited environment would be more difficult and consequential.203

The RAND study cautioned that all sellers of a particular technology must participate in the tagging and that this would probably also require cooperation of the buyers. Otherwise, buyers would gravitate to untagged items, if they were available. Attempts to conceal system location or deviate from a pattern of cooperation would be considered evidence of a potential failure of performance by the buyer. The study concluded that tagging may become an important oversight method for controlling technology transfers, but that it should never become the sole means of oversight.204

Technical Safeguards

In 1994 several types of technical safeguards were in advanced development in the United States. The technologies required for these safeguards were expected to enter testing within the next two years. They included:

    • Controlled-execution UNIX ó a modified computer operating system that could run only certain pre-approved programs; likely to be most useful for computers sold to facilities such as weather-forecasting centers, oil companies, automobile manufacturers, and banks
    • "Black box" monitoring hardware ó inexpensive, secure, long-term audit recording devices, possibly based on write-once optical storage units that could be embedded in mass-produced workstations; analogous to the black box flight-data recorders that are installed in aircraft and used for post-crash accident analysis
    • "Meltdown" software ó modified operating system programs designed to require updating by the manufacturer at fixed times; if not updated, the computer refuses to run
    • Automated auditing tools ó pattern-recognition or rule-based software; would assist monitoring agencies to more effectively inspect huge collections of data from system activity logs and detect the (presumably few) incidents worth detailed analysis

Although these technical safeguards seem feasible, none had been proved to be inexpensive, sensitive enough to detect most illegal activity, and difficult to circumvent by determined adversaries. The auditing tools under development showed great promise, however. Authorities were pessimistic about the likelihood that technical high-performance computer safeguards would be widely adopted and able to succeed in the near future.

Other Possibilities

Officials of the Mitre Corporation made several suggestions to strengthen U.S. national security in the context of HPC export controls. These included:

    • Improving and enforcing end use and end-user verification
    • Controlling embedded HPC systems that are useful in military applications
    • Monitoring or precluding the expansion capability of computer hardware
    • Marketing aggressively all generic computing capabilities, such as scanning, to the PRC to maximize profits and to keep the PRC market-dependent on the United States
    • Focusing on control of any hardware, software, tools, and services that uniquely support PRC military applications that are strategic in nature or could facilitate the tactical turning point in a conflict.205

Back  |  Forward


COX REPORT

Overview
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

Recommendations
pages 1 | 2 | 3

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



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