A dual-control system was established for tier 3 countries, such as Russia and China. It has identified high performance computing as having applications in such national defense areas as nuclear weapons programs, cryptology, conventional weapons, and military operations. The study concluded that “the acquisition and application of HPCs to nuclear weapons development would have the greatest potential impact on the Chinese nuclear program—particularly in the event of a ban on all nuclear weapons testing.” Also, India and Pakistan may now be able to make better use of HPCs in the 1,000 to 4,000 MTOPS range for their nuclear weapons programs because of the testing data they acquired in May 1998 from underground detonations of nuclear devices, according to the DOE report. Current Foreign Availability of HPCs

Based on EAA’s description of foreign availability, we found that subsidiaries of U.S. companies dominate overseas sales of HPCs. According to U.S. HPC exporters, there were no instances where U.S. companies had lost sales to foreign HPC vendors in tier 3 countries. The U.S. companies primarily compete against one another, with limited competition from foreign suppliers in Japan and Germany. The only global competitors for general computer technology are three Japanese companies, two of which compete primarily for sales of high-end computers—systems sold in small volumes and performing at advanced levels. Two of the companies reported no exports to tier 3 countries, while the third reported some exports on a regional, rather than country basis.One German company sells HPCs primarily in Europe but has reported a small number of sales of its HPCs over 2,000 MTOPS to tier 3 countries. However, foreign government officials said that they do not enforce U.S. reexport controls on unlicensed U.S. HPCs. Officials of U.S. HPC subsidiaries explained that they primarily compete for sales in local markets with other U.S. HPC subsidiaries. Moreover, Commerce’s position on this matter is not consistent with that of DOD. What our report actually states is that (1) except for nuclear weapons, the executive branch has not identified how and at what performance levels specific countries of concern may use HPCs for national security applications and (2) the executive branch did not undertake a threat analysis of providing HPCs to countries of concern. 105-85) required that we review the national security risks relating to the sale of computers with a composite theoretical performance of between 2,000 and 7,000 millions of theoretical operations per second (MTOPS) to end users in tier 3 countries. To determine the executive branch’s actions to assess or analyze the national security risks of allowing high performance computers (HPC) to be provided to countries of proliferation and military concern, we reviewed the Department of Defense (DOD) and the Department of Energy (DOE) documents on how HPCs are being used for nuclear and military applications. 3.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the efforts by the executive branch to determine national security risks associated with exports of high performance computers (HPC).

What GAO Found

GAO noted that: (1) the executive branch has identified high performance computing as having applications in such national defense areas as nuclear weapons programs, cryptology, conventional weapons, and military operations; (2) however, except for nuclear weapons, the executive branch has not identified how and at what performance levels specific countries of concern may use HPCs for national defense applications--an important factor in assessing risks of HPC sales; (3) a Department of Energy study on nuclear weapons was completed in June 1998; (4) the study shows that nuclear weapons programs in tier 3 countries (which pose some national security and nuclear proliferation risks to the United States), especially those of China, India, and Pakistan, could benefit from the acquisition of HPC capabilities; (5) the executive branch has only recently begun to identify how specific countries of concern would use HPCs for nonnuclear national defense applications; (6) to date, a Department of Defense study on this matter begun in early 1998 is not completed; (7) with regard to foreign availability of HPCs, GAO found that subsidiaries of U.S. computer manufacturers dominate the overseas HPC market and they must comply with U.S. controls; (8) three Japanese companies are global competitors of U.S. manufacturers, two of which told GAO that they had no sales to tier 3 countries; (9) the third company did not provide data on such sales in a format that was usable for GAO's analysis; (10) two of the Japanese companies primarily compete with U.S. manufacturers for sales of high-end HPCs at about 20,000 millions of theoretical operations per second (MTOPS) and above; (11) two other manufacturers, one in Germany and one in the United Kingdom, also compete with U.S. HPC suppliers, but primarily within Europe; (12) only the German company has sold HPCs to tier 3 countries; (13) Japan, Germany, and the United Kingdom each have export controls on HPCs similar to those of the United States, according to foreign government officials; (14) because there is limited competition from foreign HPC manufacturers and U.S. manufacturers reported no lost sales to foreign competition in tier 3 countries, GAO concluded that foreign suppliers of HPCs had no impact on sales by U.S. exporters; (15) in addition, Russia, China, and India have developed HPCs, but the capabilities of their HPCs are believed to be limited; (16) thus, GAO's analysis suggests that HPCs over 2,000 MTOPS are not available to tier 3 countries without restriction from foreign sources.