Report: Cellular modules from Chinese companies in smart home devices are national security risk

A new report is warning that Chinese-produced cellular modules, tiny components that are inside smart home devices, present a significant national security risk for the United States.

The Foundation for Defense of Democracies (FDD) report, first shared with The Hill, found that two Chinese firms, Quectel and Fibocom, control nearly half the global market for cellular modules.

This creates both espionage and sabotage risks, the report said, as it could provide a backdoor for China to deactivate the modules, which are used in households and businesses.

Ports, hospitals, power grids, cranes and transportation networks rely on cellular modules. Theoretically, these modules can shut down their host devices and also collect large amounts of data since their manufacturers maintain remote access to provide firmware and software updates, the report said.

The modules are found in doorbells, refrigerators and thermostats, among other devices.

“If Beijing consolidated control of U.S.-based modules, it could disrupt an American military mobilization in response to a Chinese invasion of Taiwan. Or, amid a crisis, Beijing could hold Washington hostage by threatening to cause massive economic disruption,” FDD’s Mark Montgomery, the senior director of FDD’s Center on Cyber and Technology Innovation and Jack Burnham wrote in the 6-page report.

“Dispensing with cellular modules is not an option. They are essential to automation and will be critical to integrating artificial intelligence (AI) into real-world environments, bridging the gap between frontier models and the factory floor,” the authors wrote. “The challenge ahead for the United States is how to stop and reverse the proliferation of Chinese modules. These risks are hypothetical so far, but their cumulative effects could be catastrophic.”

Cellular modules may pose cybersecurity risks as they are a necessary part of router systems that connect to a 4G or 5G network in case WI-FI goes out.

Because China’s national security law permits the government to have access to firms’ data to aid its surveillance efforts, China could theoretically have access to large portion of Americans’ information while “positioning Beijing along key connectivity nodes that may be used to track specific individuals or identify broad patterns,” the report said.

“The first concern is that cellular modules embedded in Wi Fi modems could have access to the information that’s passing through that modem, and then once they have that information, because cellular modules are connected back to the manufacturer in China, that information that is collected by that cellular module could then be accessed by the CCP,” Burnham, a senior research analyst at FDD’s China Program, said in an interview with The Hill on Wednesday.

Quectel and Fibocom, while they face competition from Western companies, still control almost 45 percent of the market, according to FDD.

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