It's a good question. If I had to take a shot at what is meant it would be that it has a tcp/ip stack in the BIOS. In fact I'm pretty confident of this as there are BIOS options to update the BIOS on at least some systems. So what is probably happening is that when the technology is activated in the BIOS it'll send packets to an IP on the Internet which is run by one of these service providers. If the service provider says "it's been reported stolen" the motherboard/CPU a signal is sent to the CPU to disable it. If try to pull the CPU and install it in another machine it probably won't work. What happened was the CPU contained a bit of flash and when the signal was sent to the CPU it got recorded. Since flash doesn't require power the CPU doesn't work in other machines. I would bet that technically the CPU isn't really disabled. It's probably the motherboard that reads something from the CPU and if it is set to 'stolen' simply won't boot. That's a wild guess on my part. Either way you could do this to any/all the different components on the system probably. The CPU and probably motherboard are the only ones that probably have this though.

What is most concerning is that there is a significant amount of code nobody is allowed to look at. It is suggested (or I'm going to suggest) that these features could be used maliciously (without your permission, by say a government, or another sophisticated malicious party). Either they could intentionally be buggy such that a government agent has the ability to remotely enable the technology or a hidden feature that then enables a more silent bug. Unlike with an operating system bug that an agent might have used in years past you can't simply reload to remove it.

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