Supermicro Stock Plummets 60% Following Spy Chip Story

Technology

Published: October 4, 2018 1:55 pm

Last Updated: January 11, 2020 4:53 pm

Silicon Valley-based Super Micro Computer, which trades over-the-counter under the ticker symbol SMCI and is more commonly known as Supermicro, has seen its stock get battered following a Bloomberg News report that the company’s high-end servers include a spy chip. The chip was allegedly attached to the motherboard of Supermicro-built servers and PCs for some 30 companies including Apple Inc. (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN).

According to Bloomberg, Chinese government workers added the spy chips to machines built for Supermicro in China. The chips are roughly the size of a sharpened pencil tip and have very limited capability. But it’s enough.

The chip is a kind of “Manchurian Candidate” bit of silicon that wakes up when the computer is activated with the sole function of opening a (stealth) doorway into the computer that would then allow China-based operatives to gain access to the network through the altered machines. Bloomberg noted that it did not know of any user data that had been stolen, but the servers are used by wide variety of U.S. Defense Department offices as well as U.S. CIA operations.

The likely targets of the attacks against companies would be intellectual property, financial information and other generally non-public information. Attacks against U.S. intelligence-gathering services would certainly have other targets.

Supermicro hardware, like Microsoft software, is everywhere. A former U.S. intelligence officer told Bloomberg, “Attacking Supermicro’s motherboards is like attacking Windows. It’s like attacking the whole world.”

Bloomberg has also published responses from Apple, Amazon, Supermicro and China’s Ministry of Foreign Affairs to the depiction of events outlined in the story.

Investors have voted with their wallets, however. After dropping about 60% earlier Thursday, Supermicro stock traded down about 46% in that mid-afternoon, at $11.55, in a 52-week range of $8.50 to $27.15. Shares closed at $21.40 on Wednesday.