A 51-year-old man tried to smuggle 596 PC processors to China in a car body. Although they appear to date from 2017, they are worth a surprising amount there. This is due to a decision made by Donald Trump.
When people in Germany think of smuggling, they usually think of drugs, cigarettes or counterfeit products. A 51-year-old man was caught at the Chinese border with a very different kind of hot commodity: he was trying to smuggle computer processors from Hong Kong.
This was reported by the Hong Kong Customs Authority. The special administrative region is officially part of the country’s territory, but still has a border with China. The businessman who has now been arrested wanted to leave the region in the direction of the nearby Chinese metropolis of Shenzhen. For reasons not specified, however, the customs officials decided to X-ray the man’s Mercedes Benz. And discovered the computer chips hidden in the gaps.
Old chips at extortionate prices
The man had hidden a total of 596 Intel Xeon series processors in the gaps between the car’s bodywork, spread across 149 plastic packages. According to customs officials, the contraband was worth a total of just under 12 million Hong Kong dollars, which is equivalent to around 1.4 million euros. A single processor is therefore valued at just under 2,350 euros.
This is particularly notable because the processors are apparently quite old: According to Heise, they must be Xeon chips from the Skylake generation – and that was released in 2017. These chips are slow power guzzlers by today’s standards, so their use is not very efficient. Above all, they can be purchased in Germany for between 100 and 200 euros – a fraction of the value stated by customs.
Trump’s chip ban is still in effect
So why should anyone buy these chips, let alone smuggle them? The answer lies in a momentous decision by the US government under Donald Trump. In 2020, the government decided to significantly restrict Chinese access to US chips. Chinese companies were only allowed to import and install chips from US manufacturers such as Intel with special permission.
The most prominent victim of this policy was Huawei. At the time of the ban, the manufacturer was just getting ready to replace Samsung as the largest smartphone manufacturer in the world. Despite massive panic buying before the ban came into effect, Huawei was ultimately never able to recover from the heavy blow. Although the company is still one of the largest in China, its smartphones are virtually irrelevant in Europe.
But the USA’s more important goal is something else: to slow down China’s efforts to build gigantic server and data centers. The USA fears that these could be used to train artificial intelligence or calculate military simulations. The ban was also maintained by Trump’s successor Joe Biden. There is a large market for the smuggled chips in China, and individual smugglers are repeatedly caught with large quantities.
Investigations into processor smuggling not yet completed
Whether the Intel processors discovered were actually intended for this purpose is now the subject of investigations. Customs officials say they are trying to determine the destination of the chips and any possible partners of the smuggler. This could result in severe penalties: Hong Kong also provides for prison sentences for exporting undeclared goods.
Sources: Hong Kong Customs Authority, South China Morning Post, Heise
