What was it about capitalists selling the rope used to hang them?

Or in this case buying the rope that will be used to hang them?  From Business Insider via Instapundit:

Last year, the U.S. Navy bought 59,000 microchips for use in everything from missiles to transponders and all of them turned out to be counterfeits from China.

Wired reports the chips weren't only low-quality fakes, they had been made with a "back-door" and could have been remotely shut down at any time.
If left undiscovered the result could have rendered useless U.S. missiles and killed the signal from aircraft that tells everyone whether it's friend or foe.
Apparently foreign chip makers are often better at making cheap microchips and U.S. defense contractors are loathe to pass up the better deal.

Wired, in a story cleverly titled "Fishy Chips," tells a slightly less frightening story:

In 2010, the U.S. military had a problem. It had bought over 59,000 microchips destined for installation in everything from missile defense systems to gadgets that tell friend from foe. The chips turned out to be counterfeits from China, but it could have been even worse. Instead of crappy Chinese fakes being put into Navy weapons systems, the chips could have been hacked, able to shut off a missile in the event of war or lie around just waiting to malfunction.

The Intelligence Advanced Research Projects Agency, the spy community’s way-out research arm, is looking to avoid a repeat. The Trusted Integrated Circuit program is Iarpa’s attempt to keep foreign adversaries from messing with our chips — and check the circuits for backdoors once they’ve been made.

The U.S. has been worried about its foreign-sourced chips in its supply chain for a while now.  In a 2005 report, the Defense Science Board warned that the shift towards greater foreign circuit production posed the risk that “trojan horse” circuits could be unknowingly installed in critical military systems. Foreign adversaries could modify chips to fizzle out early, the report said, or add secret back doors that would place a kill switch in military systems.

The problem is that the United States isn’t the only game in town anymore when it comes to building better chips. Foreign chip foundries — companies that manufacture chips for third parties — are churning out more advanced products and making regular chips cheaper and more quickly. American military and intelligence customers would love to take advantage of some of these developments, but they don’t want to limit themselves to just U.S.-made technology.

The Defense Science Board warned in its report that “trust cannot be added to integrated circuits after fabrication.” Iarpa disagrees. The agency is looking for ways to check out chips once they’ve been made, asking for ideas on how the U.S. can verify that its foreign chips haven’t been hacked in the production process.

This reminds me of the story, some two decades ago, of the construction of the US embassy to the Soviet Union.  We used Russian construction contractors.  Once the building was completed it was found to be so full of KGB bugs that it was useless.  Gee, the KGB using Russian construction companies to bug the US embassy? Who woulda thought?

Gosh, Chinese microchips containing backdoors to disable US defense equipment? Go figure. Who woulda guessed?

Whether it's Barack Obama and Russia or George W. Bush and Dubai Ports World, sometimes I wonder what our defense and foreign policy establishment is thinking -- if at all.