How a bankrupt U.S. company could give China a powerful new superweapon development system

How a bankrupt U.S. company could give China a powerful new superweapon development system

Summary: What happens when a company develops innovative new technology -- really, really innovative technology, then goes belly up?

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So here's a new national security problem. What happens when a company develops innovative new technology -- really, really innovative technology, then goes belly up? What happens to the tech?

See also:Hacking attacks from China hit energy companies worldwide

We're seeing the U.S. government grapple with just this sort of problem right now, in the relatively obscure case of Huawei Technologies and 3Leaf Systems.

Let's first explore the players. 3Leaf Systems was a company that was -- apparently -- doing some interesting processor scaling work. Although the company's Web site is gone and most of the content on the Web has vanished, there's a 15-month-old report in The Register that describes some of the tech.

Roughly, 3Leaf was building technology for dynamically scalable supercomputers. In the same way you can use a box of Legos to build up toys of almost any shape, the idea that 3Leaf had was to use lots of processors to build up a specialized, parallel super-computer of pretty much any architectural need.

Now, we've had tightly-coupled and loosely-coupled multiprocessor machines and clusters for decades. But from what I can tell, the 3Leaf design was particularly scalable and malleable.

In any case, for some reason I haven't yet tracked down, 3Leaf went bankrupt. If I had to guess, I'd say it was probably skittish VCs in a nasty recession.

Enter Huawei Technologies.

This is a Chinese company that many government officials think might have some tie to the Chinese government. You think? Just about every enterprise in China has some tie or approval from the government to function. Huawei, some think, has more of a tie because, as Reuters reports, Huawei was founded by a former Chinese soldier and may have more serious ties to the Chinese military.

Anyway, Huawei decided to pick up 3Leaf's assets (including employees, patents, and servers) from the bankruptcy. Essentially, Huawei bought 3Leaf without having to buy 3Leaf.

This little deal came to the attention of Committee on Foreign Investment in the United States (CFIUS), an inter-agency group that watches over such acquisitions. CFIUS say this not good for America.

According to the Wall Street Journal (paywall), the CFIUS is asking President Obama and the Pentagon to stop the sale.

Why is everyone in such a huff?

Massively parallel computers can be used to solve big -- really, really big -- computational problems. These sorts of problems include human gene analysis, filtering signals from stars, and doing analysis of things like submarine acoustic signatures or battlefield-wide blast patterns.

If China gains easy access to this technology, and then is able to dynamically reconfigure it as needed, the implications are potentially staggering. If this technology works, and China buys it from a defunct U.S. company, then it's also possible China will have it, and we won't. That would suck.

Topics: Hardware, Government, Government US, Processors, China

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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83 comments
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  • How to make sense out of this?

    This company, which is inviable in the US, becomes a valuable asset for China? Do the same to the Chinese! Go buy a Chinese company that nobody wants in China.
    RelaxWalk
    • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

      @RelaxWalk : you are really don't know about Chinese. Ther is nothing that nobody wants in china, because of they want the whole globe.
      phankhanhhung@...
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @phankhanhhung@...

        Do I hint a little bit of grammatically-deficient racism here?

        If the US government is not smart enough to detect which technology has potential and let a company goes bankrupt, it's NOT the fault of China who's able to consider long-term development and decide to buy the assets of such a company.

        Are you jealous because somebody was able to make something wonderful from what you considered worthless?

        That's a xenophobic statement you just wrote. Talk more about the problems INSIDE USA for not being able to help the companies with such technological potentials.
        dcroteau
      • 'because of [sic !] they [i e, the Chinese] want the whole globe

        as evidenced by their 800 - 1000 military bases on foreign soil and their continual wars of aggression abroad ? Perhaps a little study and a little thought before posting would do no harm ?...<br><br>Henri
        mhenriday
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @Henri: just wait, they just still can't do what they want.
        phankhanhhung@...
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @phankhanhhung@...
        I'm sure the common Chinese person is nice, just like the common American is nice. However, their government has never denied that they want at least Taiwan and Tibet, as well as valuable possessions like the Spratly Islands (oil) and Panama Canal (force projection) for example. Neither have they abandoned their commitment to spreading Communism and authoritarianism.

        Being wary of an enemy who has sworn to destroy your way of life is not xenophobia, but rather prudence.

        This isn't the first stupid leak of military equipment by our governement. Consider the loss of MX-80 info, or when our companies (Hughes) helped them resolve their missile problems and reverse engineer our spy satellites, or when the government allowed sales of high-thrust turbine cores and side looking synthetic aperture radar. Business greed and government bungling (or maybe corruption..there were huge political contribution from the chinese) equals loss of technological advantages that keep us safe.
        JimboNobody
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @phankhanhhung@... <br><small> >>>as evidenced by their 800 - 1000 military bases on foreign soil and their continual wars of aggression abroad ? <<< </small><br>Not to mention the many big Chinese nuclear-powered aircraft carriers with hundreds of A7 'Hoodlum' supersonic jets, cruising the seven seas, ready to go beat up anyone on a moment's notice!<br>... We ARE talking about those evil Chinese, right?
        PercySludge
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @phankhanhhung@... Quote: "Ther is nothing that nobody wants in china, because of they want the whole globe. " ---Had heard about this kind of garbage when 1980s Japanese powerful economy rocks USA.
        synyan
    • We can't.

      They already have our money.
      JohnMcGrew@...
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @JohnMcGrew@...

        Only 9% of it, actually. Japan has only slightly less than that, about 8.9%. The majority of the U.S. Government's debt is owned by the U.S. citizens at roughly 58%.

        Well, at least that's what I read earlier this week. Now the articles I can find have China owning even less. Probably depends on just how you figure it.

        Anyway, debunked:

        http://seekingalpha.com/article/246958-guess-who-owns-the-most-u-s-debt-not-china

        http://en.wikipedia.org/wiki/United_States_public_debt
        grassdogstudio
      • Did you not read those links?

        @grassdogstudio@, China holds 20.6 (with Japan a close 2nd with 20.2%) with most of that acquired in the last 7 years.

        Debunked, debunked.
        JohnMcGrew@...
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @JohnMcGrew@...

        the seekingalpha article states China own 7.5% of the US debt, the Wikipedia article breaks down the foreign owned percentage of the debt and says China own the largest segment of that at 20.6%. Pretty simple to understand.
        aquillany
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @JohnMcGrew@... The money/Treasuries that the US Fed holds was paid for by just freshly printed money with no inherent value...debasement of the US dollar will lead to the debasement of the US...Bernanke is such a good citizen he is handing out money from his helicopter. bye bye
        Bradish@...
    • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

      @RelaxWalk

      Erm, you can't just go buy firms in China. Even with approval from the Chinese state, the best a foreign firm can usually hope for is a joint venture that favours the Chinese partner, and involves transfers of technology from the foreign partner to the Chinese.

      At any rate, this sounds like a military issue, not an economic one. The firm wasn't economically viable, but may have been developing technology with military potential. If that's the case, the US state probably should block the sale (just like the Chinese state would do).
      WilErz
    • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

      @RelaxWalk As a foreigner, you would not be allowed to own anything in China, ergo no buying of any Chinese company. See how this "fair trade" works when China is allowed to screw the US using their own set of rules while the US is supposed to play be another set?
      ejhonda
    • Nope, that's socialism in action...

      @RelaxWalk That's a socialized economy in action for you. The Chinese government can simply decide that a company *should* be viable, and if they screw up and prop up a bad company, people there don't really cry foul. The U.S. government has all of us watching for screwups, so they have to think twice before doing it. (To be clear, I don't mean that's a totally bad thing. Yeah, sometimes our, er, bureaucracy of principles backfires, but it's good in most cases.)
      AySz88
  • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

    I wonder how this affects the trade balances and free trade (:-
    China is bad if she doesn't sell rare earth metals at the prices the US wants; the US is great if she doesn't permit selling anything that may potentially give China some advantages. Just wonder how the US defines fair trade.
    spockv
    • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

      @spockv

      You spoke the truth!

      I'm Canadian and from my perspective, the NAFTA agreement is a big black hole centered in the USA.
      dcroteau
      • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

        @dcroteau... I'm Canadian too, but our economy has been heading to the service industry long before NAFTA came into effect in the early 90s. I've seen a big black hole created by companies I have worked for in Canada (ie... Nortel) that was created by the companies own mismanagement. Our high taxes don't help... and the fact that many companies in the USA (and I dare say Europe) tend to buy their own home grown products (like the baby Bells have long been in bed with one of their own like Lucent).
        krustykanuck
    • RE: How a bankrupt U.S. company could give China a powerful new superweapon development system

      @spockv "fair trade" This has nothing whatsoever to do with free trade. No country wants to get sensitive information to another country.
      kdjkdj@...