In this paper we describe a new type of threat in which adjacent IoT devices will infect each other with a worm that will spread explosively over large areas in a kind of nuclear chain reaction, provided that the density of compatible IoT devices exceeds a certain critical mass. In particular, we developed and verified such an infection using the popular Philips Hue smart lamps as a platform.
The worm spreads by jumping directly from one lamp to its neighbors, using only their built-in ZigBee wireless connectivity and their physical proximity. The attack can start by plugging in a single infected bulb anywhere in the city, and then catastrophically spread everywhere within minutes, enabling the attacker to turn all the city lights on or off, permanently brick them, or exploit them in a massive DDOS attack.
To make such an attack possible, we had to find a way to remotely yank already installed lamps from their current networks, and to perform over-the-air firmware updates. We overcame the first problem by discovering and exploiting a major bug in the implementation of the Touchlink part of the ZigBee Light Link protocol, which is supposed to stop such attempts with a proximity test. To solve the second problem, we developed a new version of a side channel attack to extract the global AES-CCM key that Philips uses to encrypt and authenticate new firmware. We used only readily available equipment costing a few hundred dollars, and managed to find this key without seeing any actual updates.

Source: IoT Goes Nuclear – Creating a ZigBee Chain Reaction