Valley of Thefts

Stolen chips are a hot industry

Officials at Monolithic Memories, Inc., a Sunnyvale, Calif., manufacturer of advanced integrated computer circuits, left for the long Thanksgiving weekend confident about the security of their plant.

Some $2.7 million worth of chips, the flake-size bits of silicon that are the brains of computers, was locked inside wire mesh cages that were surrounded by motion detectors, monitored by closed circuit television and watched by guards. The 498,000 chips were soon to be shipped to companies like Data General, Apple and Hughes Aircraft and would eventually find their way into video games, home computers and space program equipment.

But when company officials returned to work last week, the chips were no longer in the warehouse. There were no signs of forced entry, and Chris Charvez, a sergeant in the Santa Clara County sheriffs department, said, "It clearly looks like an inside job."

Although this was the largest high-technology theft in the so-called Silicon Valley, the mecca of prosperous, advanced companies located just south of San Francisco, it was only the latest incident. An estimated $20 million worth of computers and integrated circuits is now being stolen annually in the region.

This was the second theft in twelve months at Monolithic. Last December, in a case yet to be solved, $120,000 worth of platinum used in the manufacture of semiconductors vanished from the firm. Earlier, at the Intel Corp., which is located 1 1/2 miles away from Monolithic, 10,000 memory devices for microcomputers, worth $1 million, were stolen by an employee. Those chips found their way to underground distributors in West Germany, who sold them to the unsuspecting West German manufacturer Siemens. Authorities say that other equipment stolen from the Silicon Valley has wound up in Eastern Europe and the Soviet Union. Laments John O'Loughlin, manager of security for Intel: "Tracing the products is difficult. Markings can be erased and counterfeit identification can be stamped on them."

The Silicon Valley prides itself on its laid-back, open atmosphere modeled after college campuses. But that is changing. A group of companies has formed the Industrial Security Managers Group and is putting pressure on law-enforcement agencies to pursue these crimes. The FBI, Commerce Department, local police and sheriffs department are now involved in major chip-theft cases. A new private investigation firm in Palo Alto is also specializing in these high-technology crimes. Those groups hope that together they can write the final chapter in Goodbye Mr. Chips.

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