SAN FRANCISCO (CN) — A Chinese national pleaded guilty Thursday to illegally exporting U.S. technology to a prohibited user in China in violation of U.S. federal law.
As part of his plea agreement, Lin Chen, 65, admitted that he knowingly attempted to buy a wafer-cutting machine used to process electronic semiconductors to eventually sell to a company on the Department of Commerce’s Entity List.
Federal regulations restrict the export of certain items to companies, research institutions, and other entities identified on the Department of Commerce’s Entity List.
A federal grand jury indicted Chen in late 2020 on charges including smuggling, submitting false electronic export information, conspiracy to violate the International Emergency Economic Powers Act.
Chen pleaded guilty to causing an unlawful export in violation of the act. He is currently out on bond.
Chen’s sentencing hearing will be in January 2025. If given the maximum penalty, he could face up to 20 years in prison and a fine of up to $1 million. Senior U.S. District Judge William Alsup accepted his plea in the United States District Court of the Northern District of California.
Chen revealed that he and his co-defendant Han Li, 44, intended to obtain and illegally sell a DTX-150 Automatic Diamond Scriber Breaker Machine — a device used to cut thin semiconductors used in electronics, also known as silicon wafers — to the China-based Chengdu GaStone Technology Company.
The company is on a prohibited entity list, making it ineligible to receive certain U.S. tech and services. Wafer-cutting machines like this one — which are used to cut thin semiconductors used in electronics — also require a license for export to end-users like GaStone.
To get around these U.S. federal regulations, Chen and Li arranged to buy it in the name of another company, Jiangsu Hantang International Trade Group Corp., which would act as a middleman, concealing the identity of the intended recipient.
Chen planned on buying the wafer-cutting machine from Santa Rosa, California-based company Dynatex International.
Chen and Li instructed Dynatex to ensure that the export information associated with the sale did not list Chengdu GaStone as the ultimate consignee of the shipment so that they could evade detection.
In April, federal prosecutors charged the defendants with part of a scheme to illegally export semiconductor-related machinery to a Chinese company. Li was arrested that same week in Chicago, while Chen was believed to be in China at the time.
“Stopping the illegal export of U.S. technology to China is one of the FBI’s highest priorities. We will aggressively pursue anyone who violates export control laws designed to protect our national and economic security. I am proud of the tenacious work that resulted in today’s announcement,” said FBI Special Agent in Charge Robert Tripp in April. “U.S. business leaders should be encouraged to establish a relationship with their local FBI field office to help protect against the pervasive threat of criminals looking to steal American technology.”