Toshiba technology reportedly ends up in China Machine that firm sold may aid Beijing in building missiles

September 16, 1992|By New York Times News Service

TOKYO -- Toshiba Machine Co., which was penalized by th United States for selling equipment that helped the Soviet Union silence its submarines in the 1980s, also sold a machine that may now be helping China build better missiles, a Japanese magazine reports.

Toshiba Machine concedes that in 1985 it sold an electron beam machine, a sophisticated piece of equipment used in making integrated circuits, to a company in Hong Kong. Both the company and the machine mysteriously vanished.

Toshiba Machine says it still does not know where the machine is. But the October issue of Bungei Shunju, a respected magazine here, reports that the machine is in use in China, at the Shanghai Metallurgical Research Institute.

The article, by Koei Kaga, suggests that the machine possibly is being used to make chips for missile guidance.

Selling such equipment to China, would have been a violation of export control rules in 1985, but a sale to Hong Kong would have been allowed.

Tetsuo Kadoya, a spokesman for Toshiba, said the company complied with all laws that were in effect in 1985 in selling the electron-beam machine. It received an export permit from the Japanese government and a customs certificate from the Hong Kong government that specified that the equipment would not be re-exported.

Between 1982 and 1984, however, Toshiba Machine had sold milling machines to the Soviet Union that allowed it to make quieter propellers for its submarines. After those sales came to light in 1987, Washington prohibited Toshiba Machine from exporting any products to the United States for three years. And it barred Toshiba Corp., the electronics company that owns half of Toshiba Machine, from bidding for United States government contracts for a year.

After the sales of the milling machines were revealed, Toshiba and its subsidiaries tightened their export-control practices so that even if there was some laxity in 1985, there is none now, Mr. Kadoya said. He also said that the electron beam machine in question had been removed from the export-restriction list in 1990.

The possible diversion of the Toshiba electron beam equipment, which is used in the process of imprinting microscopic circuit patterns on a silicon wafer, was first reported by another Japanese magazine, Foresight, in 1990. The Associated Press, following up on that Foresight article, said it had seen a copy of a receipt for the machine from the Shanghai research institute.

Two years ago, the incident was examined by Japan's Ministry of International Trade and Industry, which had given permission for the equipment to be exported to Hong Kong. The Pentagon is also believed to have reviewed the sale.

Not much appears to have come of their investigations, and it is unclear whether the new article, which quotes a researcher at the Shanghai institute confirming that the machine is in use there, will prompt a new look. The article is starting to circulate in Congress, where there is concern about China's sales of missiles to other nations.

Still, some people close to the Defense Department say the issue is considered an old and not very important one. Experts say it takes many different pieces of equipment, not just an electron beam machine, to make computer chips, and that many different technologies besides chips go into making missiles.

While Toshiba Machine insists it was fooled by the Chinese operation, details in the article, confirmed by Mr. Kadoya, seem to suggest that the company should have at least suspected that the equipment was being diverted.

The Hong Kong buyer, Scientific Instrument Ltd., did not have a special factory, known as a clean room, which is needed to manufacture semiconductors. But Mr. Kadoya said the company had shown blueprints to Toshiba Machine indicating it was planning to build a factory.

Toshiba Machine's own engineers would usually install such a sophisticated piece of equipment in the customer's factory. In this case, the customer asked only that the machine be shipped. And Toshiba never got a call to service the machine, which is also very unusual.

Takashi Suzuki, director of the export division at Japan's Ministry of International Trade and Industry, said that it investigated the matter after the first article appeared in 1990 and that it did not find any violation of export controls then.

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