China Spy Chips Report Adds Pressure on Pentagon Cloud Security

Tech providers vying for a $10 billion Defense Department cloud-computing contract may come under added pressure to prove their systems are secure after a report that China sneaked spy chips onto servers used by U.S. companies including Amazon.com Inc., a top contender for the Pentagon award.

Amazon, the market leader in cloud-computing services, was among almost 30 companies including Apple Inc. whose servers were infiltrated according to a Bloomberg Businessweek report based on more than a dozen sources in the government and private sector.

Apple, Amazon, server component seller Super Micro Computer Inc. and the Chinese government denied the report. When asked for comment on the implications for its Pentagon bid, Amazon pointed to its statement denying the report.

Security and procurement experts said Amazon’s prospects for winning the cloud services award may not be affected because it can argue that it was a victim that uncovered the problem. According to the report, Amazon unearthed the breaches, which happened at factories run by subcontractors in China, alerted authorities and took action to limit the consequences.

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