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Congresswoman Ann McLane Kuster

Representing the 2nd District of New Hampshire

Kuster addresses counterfeit electronics

Oct 11, 2019
In The News

HUDSON – U.S. Rep. Annie Kuster turned her attention to concerns over counterfeit electronic production in China Thursday while visiting Colt Refining and Recycling.

Her tour focused on the company’s work as well as concerns about counterfeit microchips and electronic parts, which are the result of unregulated exporting of electronic waste – e-scrap or e-waste. Kuster raises a red flag about the proliferation of these counterfeits throughout the United States military, which in turn threatens homeland security and military reliability.

“Basically, what’s happening is a lot of the e-scrap ends up going over to China, and from the e-scrap they harvest, they counterfeit these used parts,” President and CEO of Colt Harvey Gottlieb said. “So, it could be chips, a lot of it would be chips, that have a lot of information on them.”

He said information can then be pulled from those chips. All these electronic parts being used are not tested, because the waste that they come from is smuggled into China from the United States and other countries. People in China then make chips and parts to look new, and go on to sell them as new. He said this is a serious concern, because buyers do not know what the reliability is, and those can go into the country’s defense systems, which in turn risks the men and women in the nation’s military who rely on sophisticated electronic equipment. In addition, it poses a threat beyond the military in terms of public safety, infrastructure, air traffic control and more, officials said.

“If you can’t rely on them, you could be jeopardizing our infrastructure,” Gottlieb said.

He said, despite the military cracking down on this, parts have still been sold back into the military in the past. He also said that in a lot of cases, there is no data being erased from these electronics when they are shipped overseas as waste, which in turn can lead to data breaches, identity theft and cybercrime. If a computer that has not been wiped clean gets in the wrong hands, people’s personal information could get out there.

“Let’s say someone has a computer, an old computer, and didn’t erase the hard drive or the boards, and information is on those chips or the hard drive and it goes to China,” Gottlieb said. “Now, they find out everything about that person. That could easily happen.”

However, a bill Kuster introduced as a co-sponsor will ensure that this sensitive e-waste is not sold to China for illicit purposes. Aside from these security concerns, the bill also addresses environmental problems. The bipartisan bill is HR 3559 – the Secure E-Waste Export and Recycling Act, and Kuster said it is a combination of addressing those security and environmental concerns, with the end product bringing more American jobs online.

The Chinese are creating these counterfeit electronics from the waste that is sent over there, and then the risk to the United States comes about when those counterfeit electronics get into the country’s defense, munitions, weapons systems and other infrastructure. A risk then arises with controlling the weapons systems the way the country expected, and that the Chinese are exerting influence over these munitions systems. So, this bill seeks to improve and expand this recycling industry in the United States, rather than sending these materials overseas where environmental regulations are not as strict as they are here.

“The win, win, win is that this will create jobs here by keeping the recycling of e-waste in the United States and also has an environmental goal because their processes are not as environmentally safe,” Kuster said.

Gottlieb said, in terms of environmental concerns, the way these electronics are disassembled in China is done so in backyards and dumpsites, with pieces being heated up over open fires to loosen and separate components. He said after that, the Chinese may wash off the parts in a nearby river or leave them outside in the rain.

“Environmentally, this is a bad thing,” Gottlieb said. “I guess what they do too is they sand down the parts to remove the part numbers and other marks that would indicate the quality of the part performance-wise.”

Vice President at Colt Jim Maher said the Chinese also have a competitive advantage in a number of ways, including low cost of labor and the inexpensive freight for materials, to make it out there.

“We are not against export, but we’re against the export of whole, untested electronic devices that contain these components that can be harvested, remarked, white labeled, new part numbers put on them that can go into more than just the military,” Maher said.

At Colt, machinery is used to process materials and create higher value raw materials from it. Maher said they are creating circuit boards that can be exported to go to copper smelters, as well as creating shredded aluminum, shredded plastic and shredded steels. Colt sources their materials through various corporate clients and very little ends up going out as disposal.

“In this plant we probably shred 20 million pounds a year,” Maher said.

Furthermore, Colt has four locations, the Hudson facility, two in Merrimack and another down in Hickory, North Carolina. In New Hampshire, they employ about 100 people.