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Is Bloomberg Exposed As Levo + ZTE Shares Crash Following Chinese Spy Claims

Has Bloomberg left themselves open to a massive defamation law suit after share in Super Micro crashed 43% on Friday hours after the US news service claimed that the Chinese Government was using the Companies servers to spy on Western Companies.

Shortly after Super Micro shares started to tumble so did Lenovo’s stock which at one stage was down 23%, also down was ZTE 12%, the story sent chill through investors in Chinese technology companies.

Super Micro is one of the biggest players in the server board market, and like many technology companies, it outsources manufacturing to contractors located in China.

Some of those contract manufacturers hire subcontractors when order volumes are high, and a unit of the Chinese military was allegedly able to coerce the subcontractors into modifying board designs to include the tiny spy chip, which is roughly the size of a sharpened pencil tip. The chip could then remotely grant access to malicious attackers, among other functions.

In Australia Super Micro products are distributed by Dicker Data, Tech Data and Digicor. A spokesperson for the Company in Australia Duane Bretherton described the Bloomberg story as “Bullshit”. He did admit that several Super Micro resellers and end users had contacted him after the story first appeared. Among their clients in Australia are several Defence and Federal and State Government departments.

Concerns about Chinese spying “will likely be a big part of the next phase of the trade war,” Mati Greenspan, an analyst at online trading platform eToro, said.

Motley Fool claimed that the news comes at a time when Super Micro shares were recently delisted after failing to regain compliance with Nasdaq listing requirements. The company has still not filed its Form 10-K for the fiscal year ended June 30, 2017, or any subsequent quarterly 10-Q filings, either. Shares are being trade “over the counter”.

They claim that Super Micro investors absolutely need to read the report in full, as it contains deeply troubling allegations with massive national security implications that affect government agencies and many of the largest U.S. companies. The report has expectedly sparked a slew of shareholder lawsuits, which will only add to Super Micro’s mounting legal woes.

Lenovo said the chip maker linked in the Bloomberg report to Beijing’s spying efforts, Super Micro Computer “is not a supplier to Lenovo in any capacity. Furthermore, as a global company we take extensive steps to protect the ongoing integrity of our supply chain.”

Super Micro Computer said it “has never found any malicious chips, nor been informed by any customer that such chips have been found.” ZTE declined to comment.

Kevin Tam, an analyst at Core Pacific Yamaichi International in Hong Kong, said supply chain worries “could have an adverse impact on Lenovo’s overseas sales.”

Shenzhen-based ZTE has for years been a top seller of smartphones to the U.S. The company has long been the subject of scrutiny by Washington due to concerns its equipment could be used by Beijing to spy on Americans, which the company has consistently denied.

This year, the U.S. slapped ZTE with an order preventing American suppliers from selling to the Chinese firm, for violating the terms of a settlement agreement resolving its evasion of U.S. sanctions. The U.S. Commerce Department later reversed the order in exchange for more than $1 billion in penalties and a change of senior leadership.

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