South Korean company smuggled $11.6 million worth of US-made chips into China

midian182

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What just happened? We've heard plenty of stories about individuals smuggling components into China, usually by strapping said items to their bodies, but this one's quite different: 96,000 US-made chips worth $11.6 million were smuggled into China via South Korea over the course of three years, and so many people were involved that an entire company ran things.

The Seoul Main Customs Office announced that for three years starting in August 2020, individuals in South Korea operating "Company A" smuggled US-made semiconductor integrated circuits into China.

The process started with the chips being legally purchased and then imported into South Korea by Company A, which legitimately distributes overseas electronic components in the country, according to BusinessKorea.

The chips were then smuggled into China on 144 different air transport trips without declaring them to customs. Company A managed to avoid suspicion by ordering more chips than it needed from official distributors, and smuggling the excess into China in small batches disguised as sample products.

The chips, designed to convert analog signals to digital, are under export and import restrictions due to their potential use in the manufacture of weapons of mass destruction.

Company A smuggled 96,000 chips with a value of $11.6 million into the Asian nation, with 53,000 of them, valued at $8.8 million, classed as strategic items. The firm hid the money it made from selling the chips by submitting fabricated documents to banks, falsely declaring the value of components to customs, and by employing methods such as money laundering.

The CEO and executives of Company A have been referred to the Seoul Central District Prosecutors' Office without detention on charges of violating the Foreign Trade Act, the Customs Act, and the Act on the Regulation of Concealment of Criminal Proceeds. It's unclear where the smuggled chips ended up once they arrived in China.

Smuggling chips into China is a practice that has gone on for years, though it's usually on a smaller scale perpetrated by individuals trying to avoid paying import taxes. Some of the bigger incidents we've seen include over 780 Intel processors worth more than $137,000 being discovered in the engine of a cross-border bus. There was also the man who tried to smuggle $3.8 million of electronics from Hong Kong into mainland China. Nothing comes close to the scale of this 3-year South Korean operation, though.

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As long as there is profit to make this will happen, sactions just encorage black market and smuggling. Surely ASML will smuggle a EUV-High if there is enough profit
 
They didn't name the company? I guess the U.S. will just have to stop exporting those chips to South Korea.
 
As long as there is profit to make this will happen, sactions just encorage black market and smuggling. Surely ASML will smuggle a EUV-High if there is enough profit
What I don't understand is China's import taxes. We see a lot of articles about Chinese customs catching this. Although, I haven't seen much information about what customs do with those chips.
 
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