Targeting U.S. Technologies
East Asia and the Pacific

Case Study

OVERVIEW

Entities from East Asia and the Pacific were the most active collectors of U.S. technology for the sixth consecutive year. In fiscal year 2009 (FY09), suspicious contact reports (SCRs) with an East Asian and Pacific nexus represented 36 percent of all such reports to the Defense Security Service (DSS), more than the next two leading regions combined.

Collectors from the East Asian and Pacific region continued to rely primarily on commercial companies to acquire sensitive U.S. technology and preferred to directly request sensitive technology from cleared contractor facilities. These suspicious entities continued to target information systems, sensors, and electronics technologies to augment their military modernization plans. Industry reporting in FY09 once again illustrated the regionís willingness to acquire U.S. technologies through illegal means.

COLLECTOR AFFILIATIONS

In FY09, over half of the East Asian and Pacific-originated suspicious contacts stemmed from commercial entities. Entities with unknown affiliations, consisting mostly of those employing cyber collection techniques, were responsible for 17 percent of collection attempts, and government associated entities rounded out the top three collector affiliations with 15 percent of the reported collection attempts linked to this region.

Commercial collectors from this region used various avenues in attempts to acquire U.S. technology including: using U.S. government licensing channels, using U.S. companies as intermediaries, and directly requesting to purchase goods.

East Asian and Pacific collectors continued to exploit U.S. universities and government-sponsored research institutes to acquire U.S. technology.2,3 In most of these incidents, graduate and post-graduate students from this region attempted to gain access to sensitive U.S. research and development (R&D) facilities through requests for visiting scholar research positions. Often, the solicitations for research positions were in military or sensitive dual-use technology areas. Students from the East Asian and Pacific region also contacted experts at cleared contractor facilities to request evaluations of technical papers.

Analyst Comment: Requesting U.S. technical experts to evaluate academic papers provides collectors an efficient, cost-saving exploitation method to both build rapport with experts and assists in determining which R&D paths hold promise and which are dead ends. Collectors likely use these papers as an opportunity to garner otherwise restricted information. (Confidence Level: High)

Figure 6

METHODS OF OPERATION

As in previous years, the direct request for information method of operation (MO) was the most common MO during FY09. East Asian and Pacific collectors employed this MO nearly 75 percent of the time when illicitly contacting cleared industry. These direct requests usually came in the form of an email to cleared contractors requesting to purchase specific products.

Not to be overlooked, suspicious Internet activity accounted for 11 percent of East Asian and Pacific-related SCRs in FY09, down from previous yearsí reporting but still representing the regionís second most prolific collection MO. Although DSS noted a nominal decrease in the reporting of such incidents affiliated with entities in the East Asian and Pacific region, they were still more active in cyber operations than entities from any other region, accounting for more than half of all cyber-related SCRs received from cleared industry.

Analyst Comment: The decline in overt FY09 cyber operations is likely more indicative of regional collectors increasingly finding ways to disguise suspicious Internet activity, rather than representing an actual decrease in cyber activity. (Confidence Level: Moderate)

Figure 7

TARGETED TECHNOLOGIES

Over the past year, East Asian and Pacific collectors most frequently targeted cleared industry for information systems, sensors, and electronics technologies. Requests for information systems technology accounted for more than 20 percent of East Asia and Pacific-originated SCRs in FY09. Suspicious contacts related to aeronautics, last yearís second-most commonly sought technology, decreased to only eight percent of reporting, trailing sensors and electronics technologies in this region.

Collection interest in sensors technology rose over the course of the past year, almost tripling in volume to encompass 17 percent of FY09 reports. Requests for sensors specifically included restricted technology related to radar, sonar, hyper-spectral imagery, and infrared imagery.

Analyst Comment: Although sensors technology supplanted aeronautics in the hierarchy of frequently targeted technologies, it is highly likely this decline was more attributable to increased sensors and electronics targeting, especially related to marine systems, as opposed to any real decrease in aeronautics targeting. As regional military forces engage in modernization campaigns, they will likely continue to actively target cleared industry to address current intelligence, surveillance, and reconnaissance limitations. (Confidence Level: High)

Electronics technology also saw a large increase in collection attempts, accounting for 11 percent of reported attempts from to the region. Most notably, suspicious entities sought technology related to radio frequency receivers, wave guides, and phase shifters.

Analyst Comment: The targeting of technologies associated with electronic warfare (EW) and those technologies that allow for secure command, control, communications, computer, intelligence, surveillance, and reconnaissance (C4ISR) systems is likely to continue. Cleared industry reporting confirms U.S. Intelligence Community assessments that EW is an increasingly important component of military modernization strategies within the region. It is also likely regional collectors will seek to augment reverse-engineering programs and aid indigenous EW and military efforts. (Confidence Level: Moderate)

Table 1

ANALYTICAL FORECAST

It is highly likely East Asian and Pacific-based collection efforts will continue to use direct requests via commercial companies to acquire U.S. technology in the coming years. In addition, collectors will continue to exploit the Internet to contact cleared industry directly while simultaneously pursuing cyber operations. Entities from the East Asian and Pacific region will also likely try to establish new academic partnerships and exploit newly formed business relationships in an effort to acquire U.S. export-controlled or classified technology.

Considering efforts to push forward with military modernization plans, collectors will likely continue to target information systems and C4ISR technologies resident in cleared industry to foster technical and military modernization programs. It is highly likely East Asian and Pacific entities will continue to circumvent traditional foreign military sales procedures and target information systems technology, including encryption devices, sensors, and electronics technologies related to EW and marine efforts, to satisfy their military modernization collection priorities. (Confidence Level: High)

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