China busts chip smuggling operation from Hong Kong amid semiconductor supply crunch

·3-min read

Chinese customs said they have busted two recent cases of Hong Kong drivers trying to smuggle computer chips into mainland China via the Hong Kong-Zhuhai-Macau Bridge, as demand for semiconductors soars amid a global shortage.

Customs officers found and seized a total of 256 Intel central processing units (CPUs) taped to a driver’s chest and calves in an inspection on June 16, according to an official report.

The driver was stopped and searched because he “acted abnormally and looked nervous” during a normal inspection at the inbound entry lane into mainland China, the customs authority said in a video released this week.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Officers intercepted another batch of 52 smuggled Intel CPUs in another inspection 10 days later, when a driver tried to sneak in the chips by stuffing the package in between the two front seats of the vehicle.

Both cases were under further investigation, customs said.

Semiconductor investment frenzy ramps up in Asia amid chip shortages, tech war

The chip-smuggling cases come amid a global semiconductor shortage that has caused severe disruption to auto production around the globe. Despite vows from global foundries like Taiwan Semiconductor Manufacturing Co to ramp up capacity as soon as possible, the shortage continues unabated, with many customers in China scrambling to secure supplies from the fabs, according to industry insiders.

While it is not the first time Chinese customs have intercepted smuggled chips from Hong Kong, two cases in one month could indicate a rise in such activity due to the dire supply and demand situation.

Separately, on June 16 three men in Hong Kong assaulted and robbed a man of electronic chips worth about HK$5 million (US$644,000), in a rare hi-tech robbery case in Hong Kong.

In 2013, Shenzhen customs busted a smuggling gang involving 12 people and seized 120,000 chips in one raid at an underground mainland Chinese electronics factory.

China’s annual imports of integrated circuits, a subset of the overall semiconductor market, have amounted to US$300 billion in recent years. Semiconductor imports totalled at US$350 billion last year, a year-on-year increase of 14.6 per cent.

In the first five months of this year, China’s imports of semiconductors increased 30 per cent by volume to 260 billion units.

While China has exempted import duties for domestic semiconductor companies buying foreign equipment and inputs, it still charges import duties on finished chips. The general tariff on CPU imports is 24 per cent, with an additional VAT set at 13 per cent.

More from South China Morning Post:

This article China busts chip smuggling operation from Hong Kong amid semiconductor supply crunch first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting