Apple Inc. CEO Tim Cook attends China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse on March 24, 2018 in Beijing, China. China Development Forum (CDF) 2018 is hosted by the Development Research Center of the State Council of China on March 24-26 in Beijing. Visual China Group | Getty Images

A report on Thursday that the Chinese government snuck a pencil tip–size spy chip into equipment from an Amazon and Apple component supplier called Super Micro was explosive, but experts say it isn't surprising: U.S. technology CEOs have been concerned about the risk of Chinese cyberespionage for years. Bloomberg reported that the tiny pieces in American products were manufactured in China and then brought back to the United States, allowing the Chinese government to access secret information from major American tech corporations. Apple, Amazon, Super Micro and the Chinese government each categorically denied the allegations in the Bloomberg story, but experts say the headline may influence an already tense trade war between the United States and China, at a time when President Donald Trump is broadening a definition of national security to stress the importance of domestic manufacturing.

Visitors walking past stands, including the Super Micro booth, during the Computex Taipei 2014 expo in Taiwan, June 3, 2014. Chris Stowers | Bloomberg | Getty Images

"I think it's just another chapter in the book of cybersecurity worries that have come from China," said Dan Ives, managing director of equity research for Wedbush Securities. "And I think it keeps a lot of U.S. tech CEOs up at night." The risks to U.S. tech companies from Chinese cyberespionage have accelerated. Tech companies from both countries have been pitted against one another, as an enormous amount of American technology is produced in China due to the cheap costs, Ives said, and competition over who will cash in on the technology of tomorrow — in particular, artificial intelligence — is extremely fierce. Security concerns are virtually promised to be an issue for many years to come. Tom Kellermann, chief cybersecurity officer of the security firm Carbon Black and the former commissioner of President Barack Obama's cybersecurity council, told NBC News on Thursday that the Bloomberg article is a small example of China's larger efforts to spy on and disrupt U.S. businesses. Kellermann said his firm has tracked a threefold increase in destructive cyberattacks coming from China, pushing it past Russia over the summer to be the most active adversary targeting U.S. companies. Apple, the most profitable company in the world and the first to reach a $1 trillion market cap, like many technology companies has built its business model around a complex global supply chain that includes Chinese manufacturers. "Look, this is a game of high-stakes poker between the U.S. and China, and this is just another card that's been dealt in this game," Ives said. "[Wall] Street believes the story has credibility, and it has fanned the flames of worry around China hacking the U.S. tech giants, which have a clear bulls-eye on their back, given this threat environment."

This is a tough situation, because big corporations are never going to admit it. It would be more surprising if the Chinese didn't try to do something like this than if they did. Derek Scissors resident scholar and China expert, American Enterprise Institute.

'A tough situation'

China and the United States have competed for years economically, and China is expected to pass the United States in GDP in the coming years to become the world's largest economy. An escalating trade war is being fought between the two countries as Trump wants to eliminate America's trade deficit. Further fueling the feud is a deep divide between how China and the United States think about the relationships between government, national security and economic security, said Derek Scissors, resident scholar and China expert at the conservative think tank American Enterprise Institute. Scissors said he couldn't vouch for the specific details in the Bloomberg report, but it is consistent with the general concerns he has been hearing about for some time. "This is a tough situation, because big corporations are never going to admit it," he said, adding, "It would be more surprising if the Chinese didn't try to do something like this than if they did." The American Enterprise Institute China expert said he spoke with administration officials in November 2016 during discussions about the start of an investigation of China's policies for tech transfer and intellectual property, called a Section 301 investigation, and attendees specifically brought up the threat of China using the supply chain to steal trade secrets from American tech companies or importers. Chinese trade-secret theft is not new, he said, but the methods outlined in the Bloomberg piece are, though it makes sense, as Chinese methods are growing more complex over time. "The fundamental clash here between the U.S. and China comes from the fact that China is not a market economy," Scissors said. The United States draws a sharp distinction between government and business interests, and its people are often deeply skeptical of Uncle Sam interfering with corporations. Historically, Scissors said, the United States has looked at national and economic security as separate domains, and there's no incentive or even mechanism by which the government would take action to help American businesses or hurt foreign competitors. "We've always thought if you're spying on their government or their military, that's normal, but spying on their companies — oh, that's cheating," Scissors said. For China, on the other hand, anything goes. "Their government works hand in hand with their companies all the time," he said. "That's absolutely standard practice in China, and it would be bizarre if they didn't do that."

If you look at U.S. and China tech and then throw 5G in it — look, it's going to be like an MMA battle in the coming years. Daniel Ives managing director of equity research at Wedbush Securities

America's longstanding norms of separation seem to be thawing, as the Trump administration is inching toward China's approach by slapping tariffs on foreign steel and cars saying it is in America's national security interest, though Scissors said the use of national security in the tariff context was questionable. Either way, the U.S. is still nowhere close to China's total singularity of the two domains, he added. Within the past two years, the Trump administration also has been preceding on several fronts specifically to protect against Chinese technology threats, with multiple investigations about Chinese intellectual property abuses through the Committee on Foreign Investment in the U.S., known as CFIUS, and at the highest levels of U.S. government, warnings have been issued to American consumers about buying smartphones from two of China's largest cell phone makers, ZTE and Huawei. The threat that ZTE, viewed by some skeptics as an arm of the Chinese government, could build key future telecom infrastructure in the U.S. has been a concern for years. ZTE was on the verge of bankruptcy earlier this year based on U.S. policy moves to bar it from the market, until Trump personally stepped in to alleviate some pressure. The Trump administration blocked a merger between Broadcom and Qualcomm, citing national security and the companies' role in the rollout of key 5G telecom technology. "So yes. We have taken a step in China's direction, and people complain about that both here and around the world, but there's a giant gap remaining," Scissors said. "The CIA and military are absolutely not going to take action to spy on Chinese companies for the sake of American companies. But the Chinese absolutely are."

How the US will respond