The Big Hack

Allegedly, Chinese intelligence “People’s Liberation Army” forced factories in China to add tiny microchips, into server boards from industry leading Supermicro to be sold to basically every one including Amazon and Apple. One, the largest resources for virtual machines and secure web services which include almost every government agency in the world, most online commerce platforms, home automation services, the other a telecommunications and personal computing giant. The scope of the hack is truly daunting. These microchips weren’t part of the design specifications submitted to clients and at less than half a centimeter are incredible difficult to discover. This tiny chip opens a backdoor, which allows anonymous computers to siphon data from some of the largest data centers in the world.
In 2015, Amazon.com Inc. began quietly evaluating a startup called Elemental Technologies, a potential acquisition to help with a major expansion of its streaming video service, known today as Amazon Prime Video. Elemental made software for compressing massive video files and formatting them for different devices. Its technology had helped stream the Olympic Games online, communicate with the International Space Station, broadcast church sermons, stream video in the porn industry and funnel drone footage to the Central Intelligence Agency. Elemental’s national security contracts weren’t the main reason for the proposed acquisition, but they fit nicely with Amazon’s government businesses, such as the highly secure cloud that Amazon Web Services (AWS) was building for the CIA.

To help with due diligence, AWS, which was overseeing the prospective acquisition, hired a third-party company to scrutinize Elemental’s security, according to one person familiar with the process. The first pass uncovered troubling issues, prompting AWS to take a closer look at Elemental’s main product, the servers that customers installed in their networks to handle the video compression. These servers were assembled for Elemental by Super Micro Computer Inc.Nested on the servers’ motherboards, the testers found the tiny microchip. Amazon reported the discovery to U.S. authorities, sending a shudder through the intelligence community. Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. And Elemental was just one of hundreds of Supermicro customers.

During the ensuing top-secret probe, which remains open more than three years later, investigators determined that the chips allowed the attackers to create a stealth doorway into any network that included the altered machines. Multiple people familiar with the matter say investigators found that the chips had been inserted at factories run by manufacturing subcontractors in China.The entity involved was willing to spend time and money to attain long term access into these systems. In emailed statements, Amazon (which announced its acquisition of Elemental in September 2015) “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. The Chinese government didn’t directly address questions about manipulation of Supermicro servers, issuing a statement that read, in part, “Supply chain safety in cyberspace is an issue of common concern, and China is also a victim.” The FBI and the Office of the Director of National Intelligence, representing the CIA and NSA, declined to comment.

Back in 2006, three engineers started Elemental Technologies, assembling what one former adviser to the company calls a genius team to write code that would adapt the super fast graphics chips being produced for high-end video-gaming machines. The resulting software dramatically reduced the time it took to process large video files. Elemental then loaded the software onto custom-built servers emblazoned with its leprechaun-green logos. Elemental servers sold for as much as $100,000 each, at profit margins of as high as 70 percent, according to a former adviser to the company. Supermicro had been an obvious choice to build Elemental’s servers. Supermicro’s motherboards would be engineered mostly in San Jose, close to the company’s biggest clients, even if the products were manufactured overseas.

Today, Supermicro sells more server motherboards than almost anyone else. It also dominates the $1 billion market for boards used in special-purpose computers, from MRI machines to weapons systems. Its motherboards can be found in made-to-order server setups at banks, hedge funds, cloud computing providers, and web-hosting services, among other places.

The chips on Elemental servers were designed to be as inconspicuous as possible, according to one person who saw a detailed report prepared for Amazon by its third-party security contractor, as well as a second person who saw digital photos and X-ray images of the chips incorporated into a later report prepared by Amazon’s security team. Gray or off-white in color, they looked more like signal conditioning couplers, another common motherboard component, than microchips, and so they were unlikely to be detectable without specialized equipment. Depending on the board model, the chips varied slightly in size, suggesting that the attackers had supplied different factories with different batches. Since the implants were small, the amount of code they contained was small as well. But they were capable of doing two very important things: telling the device to communicate with one of several anonymous computers elsewhere on the internet that were loaded with more complex code; and preparing the device’s operating system to accept this new code. The illicit chips could do all this because they were connected to the baseboard management controller, a kind of superchip that administrators use to remotely log in to problematic servers, giving them access to the most sensitive code even on machines that have crashed or are turned off.

This system could let the attackers alter how the device functioned, line by line, however they wanted, leaving no one the wiser. A secure machine is open to any and all users. A chip can also steal encryption keys for secure communications, block security updates that would neutralize the attack, and open up new pathways to the internet. Should some anomaly be noticed, it would likely be cast as an unexplained oddity. “The hardware opens whatever door it wants” says Joe Fitz Patrick, founder of Hardware Security Resources LLC, a company that trains cyber security professionals in hardware hacking techniques.

Obviously, the effected companies are pulling out and concurrent with the illicit chips’ discovery in 2015 and the unfolding investigation, Supermicro has been plagued by an accounting problem, which the company characterizes as an issue related to the timing of certain revenue recognition. After missing two deadlines to file quarterly and annual reports required by regulators, Supermicro was delisted from the Nasdaq on Aug. 23 of this year. It marked an extraordinary stumble for a company whose annual revenue had risen sharply in the previous four years, from a reported $1.5 billion in 2014 to a projected $3.2 billion this year.

As consumers we need to make a choice, either take the time to control all sections of production increasing cost and reduce supply or risk compromising our security. Our poignant dependence on electronics is such that some choose to ignore the biggest security breach of our generation.

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