Thousands of United States' warplanes, ships and missiles contain fake electronic components from China, leaving them open to malfunction, according to a US Senate committee.
The US Senate Armed Services Committee said its researchers had uncovered 1,800 cases in which the Pentagon had been sold electronics that may be counterfeit.
In total, the committee said it had found more than a million fake parts had made their way into warplanes such as the Boeing C-17 transport jet and the Lockheed Martin C-130J "Super Hercules".
It also found fake components in Boeing's CH-46 Sea Knight helicopter and the Theatre High-Altitude Area Defence (THAAD) missile defence system.
"A million parts is surely a huge number. But I want to repeat this: we have only looked at a portion of the defence supply chain. So those 1,800 cases are just the tip of the iceberg," said Senator Carl Levin.
In around seven in 10 cases, the fake parts originated in China, while investigators traced another 20 per cent of cases to the United Kingdom and Canada, known resale points for Chinese counterfeits.
In Chinese bazaars, "military grade" microchips are openly advertised, although these chips are often commercial chips that have been modified and relabelled.
Military grade chips are designed to withstand far greater extremes of temperature and humidity, and there are fears that the fake Chinese parts could suddenly fail.
"We cannot tolerate the risk of a ballistic missile interceptor failing to hit its target, a helicopter pilot unable to fire his missiles, or any other mission failure because of a counterfeit part," said John McCain, the senior Republican Senator on the committee.
Experts said the problems are not new, and have dated from a decision in the 1990s by the Clinton administration to cut costs by asking the Pentagon to buy "off-the-shelf" electronics, rather than designing its own systems.
As electronics manufacturing migrated to China, the US has been less and less able to control the quality of its military hardware. Some of the fake chips are bought by the Pentagon on the open market in order to maintain its fleet of older vehicles, which have outdated circuitry. These chips are often salvaged by Chinese scrap merchants from the dumps of electronic waste that have accumulated in the south of the country.
In 2008, an investigation by the US Commerce department found nearly 7,400 incidents of fake electronics in military hardware, while in 2005, internal Pentagon documents suggested that there had been equipment malfunctions because of fake parts.
The senate committee said China should "act promptly" and clamp down on its flourishing electronics black market.
However, Song Xiaojun, a former Peoples' Liberation Army officer who has become a nationalistic commentator in the Chinese media said the US had "got itself into the position it is in".
"The US has been dismantling its factories since the 1960s," he said. "And since the Clinton government, the US has turned a blind eye towards military requisitioning. As it keeps cutting its procurement budget, weapons dealers will keep providing cheaper quality products," he added. "This attack on China is political, given the forthcoming elections. But it should not be blaming China, this is a free market issue. The only solution the US has is to buy its components from Korea or Japan instead, but then its costs will rise a hundredfold."
In an interview with the New York Times on Sunday, Leon Panetta, the US Defence secretary, acknowledged that he may have to cut new weapons purchases as he tries to trim $450 billion (£280 billion) off the defence budget over the next decade.
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