Chinese National Pleads Guilty in Scheme to Illegally Export US Semiconductor Technology to China

The Department of Justice in Washington on July 29, 2024. Madalina Vasiliu/The Epoch Times

A Chinese national on Oct. 17 pleaded guilty to illegally exporting U.S. semiconductor equipment to a U.S.-sanctioned company in China, according to the U.S. Attorney’s Office for the Northern District of California.

Chen Lin, 65, admitted to knowingly attempting to buy a wafer-cutting machine with the intent to sell to a Chinese company on the Entity List, an export blacklist maintained by the Commerce Department’s Bureau of Industry and Security (BIS), according to a press release issued by the Department of Justice (DOJ) on Thursday.

Wafer-cutting machines are precision tools used in the semiconducting manufacturing process to cut semiconductor wafers into smaller pieces.

A federal grand jury indicted Chen in December 2020, charging him with conspiracy to violate the International Emergency Economic Powers Act (IEEPA), submitting false electronic export information, smuggling, and IEEPA violations. Under his plea agreement, Chen pleaded guilty to causing an unlawful export in violation of the IEEPA.

Chen was arrested in Chicago in April and is currently released on bond. His sentence hearing is scheduled for Jan. 28 next year.

If convicted, Chen faces a maximum prison sentence of 20 years and a fine of up to $1 million.

The latest case illustrates the threats posed by communist China’s espionage operations directed at the United States, including theft of trade secrets and intellectual property. In 2022, FBI Director Christopher Wray said his bureau was opening a new China counterintelligence investigation “about every 12 hours.”

Chen and his co-defendant, Li Han, allegedly intended to procure a DTX-150 Automatic Diamond Scriber Breaker machine, a wafer-cutting machine, from California-based firm Dynatex International and sell it to China-based Chengdu GaStone Technology, officials say.

However, doing so legally would require an export license from the Commerce Department since GaStone was added to the Entity List in August 2014. BIS said at the time that GaStone was added to the list because of “involvement in activities contrary to the national security and foreign policy interests of the United States.”

To skirt U.S. regulations, Chen and Li allegedly attempted to buy it in the name of a Chinese company called Jiangsu Hantang International Trade Group, which would act as an intermediary to conceal GaStone as the true end-user of Dynatex’s machine, officials say.

“To avoid detection, Li and Chen instructed Dynatex International to ensure that the export information associated with the sale did not list [Changdu GaStone Technology] as the ultimate consignee of the shipment,” federal prosecutors said.

According to the plea agreement, Chen revealed that he and Li arranged the sale on Dec. 10, 2015.

Federal prosecutors said in April that they believed Li, a Chinese national, was in China.

“Stopping the flow of U.S. semiconductor technology that supports the [People’s Republic of China’s] military modernization efforts is a top priority for the Office of Export Enforcement,” Brent Burmester, a special agent in charge of the Commerce Department, said at the time.

Burmester added, “BIS will continue to prioritize investigations involving exports of advanced technologies to prohibited parties to protect U.S. national security.”

The Epoch Times has contacted Chen’s lawyer for comment but did not receive a response by publication time.

Chengdu GaStone Technology was also implicated in another recent case.

In 2023, Shih Yi-Chi, an electrical engineer from Los Angeles, was re-sentenced to 85 months in prison for conspiring to illegally export monolithic microwave integrated circuits (MMICs), which are wide-band, high-powered semiconductor chips with military applications. He exported MMICs to China for a state-owned entity called AVIC 607. He was initially sentenced to 63 months in prison in 2021.

Shih was the president of GaStone, which was building an “MMIC manufacturing facility” in the Chinese city of Chengdu, federal prosecutors said in a 2021 press release.

According to the DOJ, “MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures, and radar applications.”

In February this year, a Chinese-born researcher was arrested for allegedly stealing trade secret technologies developed for the U.S. government to detect nuclear missile launches and to track ballistic and hypersonic missiles.