Chips Easy to Steal, Hard to Trace : Computers: Orange County haul of at least $5 million is the latest and largest in a series of thefts of the valuable components.
More valuable than gold and easier to sell than cocaine, advanced computer chips have become a prime target of thieves in recent years as demand for the high-tech parts has soared with the introduction of ever-faster computer programs.
Tuesday’s theft of at least $5 million in chips and other memory products from an Irvine firm is the latest--and probably largest--in an increasingly brazen series of robberies of computer memory chips.
Their small size and high value, a general lack of security at the small companies that handle them, and a substantial market for resale is luring outlaws who lust after the silicon wafers as pirates once chased after gold bullion.
“They’re a lot easier to dispose of than dope, and they’re not traceable,” said Julius Finkelstein, a deputy district attorney in the Santa Clara County office’s high-tech crimes unit, which handles a large number of the cases.
“It’s state-of-the-art stuff, it doesn’t weigh anything, and it’s easy enough to find a buyer,” Finkelstein said. “You’ve got a short supply and high demand--the math is easy to figure out.”
Demand for the memory chips, silicon wafers that are used to store computerized information, has driven prices up steadily in recent years. Many personal computers are now sold with eight megabytes of memory, twice as much as was common a year ago.
At the same time, a rising Japanese yen is raising the cost of products made by Japanese producers such as Toshiba Corp. and Hitachi. Worldwide sales of memory chips are expected to hit $51 billion this year, up nearly 60% from the year before.
Tuesday evening’s robbery was the largest in a series of thefts of the valuable chips from Orange County firms that began in February, 1993. In that case, a Brea firm reported it was robbed of $2.5 million worth of the chips. Four men believed to have planned that robbery later pleaded guilty to a variety of related changes.
Previous memory-chip thefts also have been reported in Yorba Linda and Irvine, but no arrests have been made in those cases.
Up to now, the main victims have been Silicon Valley companies, which have reported 45 robberies since January.
In one robbery in late 1993, gunmen broke into a north San Jose electronics firm, shot a supervisor in the hip and kicked out the teeth of another. Several months later, burglars made off with more than $1.8 million worth of merchandise, including memory chips, from a Fremont warehouse.
Faced with such problems, Intel Corp. began putting serial numbers on its microprocessor chips in 1993 in an effort that law enforcement officials hope will be a major help in efforts to crack theft cases.
But few memory-chip companies have moved to follow Intel’s lead, citing the cost of doing so.
Memory chips are smaller than microprocessors and are sold in much greater quantities, making it difficult to add numbers to them, said Cecil Conkle, a senior product manager at NEC Electronics Inc., in Mountain View.
With a typical memory chip package smaller than a half-inch square, NEC sometimes even drops its company part numbers from its chips, Conkle said.
Most chip-producing factories are owned by Japanese, South Korean and U.S. companies. Many are expanding their production to meet increasing demand as more advanced computer software programs are introduced.
To ensure a steady supply of customers, manufacturers allocate their production among several different computer makers, including Compaq Computer Corp., IBM and AST Research Inc. When those companies run short, they in turn often buy their chips from distributors who purchase the factories’ excess inventory.
Many distributors work on a no-questions-asked basis, observers say.
“You’re talking about an industry where you can carry $100,000 worth of chips in a briefcase, and your buyers will meet you on any back street,” said Mel Thomsen, a principal at Pathfinder Research Inc., a market-research company in San Jose.
“If a lot of companies are secretive about where they get their parts, one of the reasons is what happened in Irvine,” he said.
Centon had sales of $144 million last year and was likely to grow to twice that by the end of this year, industry analysts and competitors said. The privately held company listed 180 employees in a 1994 filing with Dun & Bradstreet Corp.
Centon officials declined to comment Wednesday.
Centon is one of a number of companies that have made Orange County a distribution and manufacturing center for computer memory products. Other large firms include Viking Components Inc. in Laguna Hills, which makes memory upgrade for personal computers, and Kingston Technology Corp. in Fountain Valley.
Tuesday night’s robbery has many companies re-evaluating their security procedures.
Rob Reed, president of Memory International Inc. in Irvine said the company has kept an armed guard at its offices since December, after realizing how many valuable parts were stored at the company.
But without serial numbers or other industry standards to protect the parts, he said, “there’s only so much you can do.”
When he had worked at another Orange County computer components company several years ago, he said, a burglar stole 150 microprocessor chips worth about $350 each; several days later a vendor called and tried to sell the same quantity back to the company for $100 less per chip.
“It wasn’t that the vendor had stolen them himself, he’d just gotten them from somewhere. But we only had lot numbers, not serial numbers, so there wasn’t a whole lot you could do,” Reed said.
* THEFT IN IRVINE
Armed robbers hit Centon Electronics. A1
