An old school version of this would be installing a camera in top of your ATM and recording your card data with the stripe, which as you say would be the stripe's fault, but here they get the information and the pin simply from the shimmer, which looking at the picture shows only a chip connector.
Then a fraudster can duplicate the card exactly, and use the duplicate with the same pin at a random ATM across the world. I think this is why banks can block your card if you didn't warn them about going abroad, as they're unable to tell if this is your card or a replica of your card used by a fraudster.
Furthermore, they can't get the card private keys in this manner, so they can't duplicate the card chip, only its magstripe; and they are definitely able to tell if a replica of your card is suddenly used in a magstripe-only mode. This means that it's a problem, as the parent post said, "only for countries like USA which have not completed the move from magnetic readers" because otherwise you can simply reject any transactions that might use a cloned magstripe.
That being said, this doesn't allow to duplicate a card (it relays the fraudulent transaction in real time to the real card while it's stuck into compromised hardware), the PIN is captured from video or the "la-cara"device, and you do need to have the "extracting" device mounted to a real ATM for prolonged periods until you can empty it (you can do it only as fast as the real transactions come in, and they do so at unpredictable intervals), which gives a nice opportunity to capture the involved people. It's a very powerful proof of concept, but harder to scale than the current "cashout crews"/mules - the logistic problems are somewhat comparable to the classic approach of setting up a completely fake ATM.
Only for countries like USA which have not completed the move from magnetic readers.