Silicon Valley besieged by chip robbers

SAN JOSE, California, is known as the safest big city in the US, but Arthur Fonda lives there in a state of suburban siege.

He constantly varies his route to work, uses counter-surveillance techniques to check whether he is being followed, and has established a coded routine with his wife so that either can signal if they are in danger. The grounds of his company's office building are constantly monitored, with motion sensors and attack buttons inside. "You just get a little paranoid," he says.

Mr Fonda is the chief executive, not of a bank or bullion operation, but of Piiceon, a small hi-tech company producing memory boards for computers. In recent months Piiceon has suffered two armed robberies and several attempted burglaries. Mr Fonda's vice-president for operations was held up with a gun at his throat and badly beaten before the thieves disappeared with their loot.

Violent computer-chip robberies have become a way of life in Silicon Valley, south of San Francisco, costing the computer industry up to $1m (pounds 660,000) a week. Shortages of DRam, or dynamic random access memory, chips, vital to the workings of most computers and mainly produced in Japan, are constant in any case. But rapid growth and technological change drive up demand for many spare parts and components faster than manufacturers can deliver through regular orders - Mr Fonda said his own firm dealt with about 20 brokers.

"In desperation, to keep manufacturing lines flowing, people turn a blind eye," said John O'Loughlin, a security officer at Sun Microsystems, which lost half a million dollars-worth of goods in two burglaries.

In the US the "grey market" for memory chips and microprocessors in short supply is dominated by sophisticated Asian gangs, although the lure of easy cash has drawn in criminals around the world. Many of the worst-hit companies in Silicon Valley have also been the targets of robberies in Britain.

But the US computer industry, allied with the FBI, is going on the offensive against chip thefts. Corporations are pooling intelligence, and have begun marking serial numbers on the most valuable chips, worth up to $1,000. The Chubb insurance group, based in New Jersey, has helped form a national Technology Theft Prevention Foundation after paying out $20m in claims on hi-tech theft in 1995. The American Electronics Association is developing a national database on hi-tech crime.

And after a four-month investigation, Operation West Chips went into action at 5am a few days ago: 500 federal agents and local law officers gathered at the San Jose convention centre to receive their orders, and in dawn raids arrested more than 50 people, mostly Vietnamese immigrants.

The operation took into custody four men allegedly at the head of loose- knit crime syndicates centred in San Jose's large Vietnamese community. One, aged 29, had bought several homes, restaurants and a bar, it was claimed, as well as handing out Mercedes and Lexus cars to relatives. Another, 28, held bank accounts that showed deposits of several million dollars.

"They were pretty much specialists," said a law enforcement source. "They would do the robberies, and purchase stolen property from other people. They had customers who were willing to buy products for cash without asking any questions."

Prosecutors believe they have broken the back of the chip robberies in northern California - for the time being, at any rate.

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