Hollywood Hills Engineer Sentenced In Military-Chip Scheme Case

HOLLYWOOD, CA — An electrical engineer from the Hollywood Hills was re-sentenced Thursday to 85 months in federal prison after being convicted for scheming to export semiconductor chips with military applications to China, according to the U.S. Attorney's Office.

Yi-Chi Shih, 68, will also serve one year of home confinement as part of his sentence, prosecutors said.

Shih in 2021 was sentenced to 63 months in federal prison after being convicted of one count of conspiracy to violate the International Emergency Economic Powers Act, and the Export Administration Regulations. Shih also was convicted of four counts of mail fraud, two counts of wire fraud, one count of conspiracy to gain unauthorized access to a protected computer to obtain information, one count of making false statements to an FBI agent, three counts of subscribing to a false tax return, and four counts of making false statements to the IRS about his foreign assets.

Shih was also ordered to pay $362,698 in restitution to the IRS and fined him $300,000, court papers show.

But an appeals court remanded the case for resentencing.

Shih was convicted of defrauding a U.S. company that manufactured chips known as monolithic microwave integrated circuits. As part of the scheme, he accessed the victim company's web portal after obtaining that access through an associate who posed as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the U.S. In this way, Shih concealed his true intent to export the U.S. company's MMICs to China.

The victim company's semiconductor chips have several commercial and military applications. MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications. The MMICs Shih exported to China were intended for the state-owned AVIC 607.

Shih was the president of Chengdu GaStone Technology Company, a Chinese company that was building a MMIC manufacturing facility in Chengdu. In 2014, CGTC was placed on the Commerce Department's Entity List, according to court documents, "due to its involvement in activities contrary to the national security and foreign policy interest of the United States — specifically, that it had been involved in the illicit procurement of commodities and items for unauthorized military end use in China."

Shih used a Hollywood Hills-based company he controlled — Pullman Lane Productions LLC — to funnel funds provided by Chinese entities to finance the manufacturing of the MMICs by the victim company. Pullman Lane received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC "on the basis of its involvement in activities contrary to the national security and foreign policy interests of the United States," according to court documents.

Shih's associate, Kiet Mai, pleaded guilty in December 2018 to one felony count of smuggling and was sentenced to 18 months' probation and a $5,000 fine.

City News Service contributed to this report.