Huawei’s Efforts to Steal Apple Trade Secrets Include Employee Bonus Program and Other Dubious Tactics

Last month, the United States Justice Department announced a series of criminal charges against Chinese smartphone maker Huawei for stealing trade secrets, bank fraud, wire fraud, and obstructing justice. Today, The Information has shed light on Huawei's tactics of stealing trade secrets, some of which were aimed at Apple.


According to today's report, a Huawei engineer in charge of the company's smartwatch project tracked down a supplier that makes the heart rate sensor for the Apple Watch. The Huawei engineer arranged a meeting, suggesting he was offering the supplier a lucrative manufacturing contract, but during the meeting his main intent was questioning the supplier about the Apple Watch.
The Huawei engineer attended the supplier meeting with four Huawei researchers in tow. The Huawei team spent the next hour and a half pressing the supplier for details about the Apple Watch, the executive said.

“They were trying their luck, but we wouldn’t tell them anything,” the executive said. After that, Huawei went silent.
This event reportedly reflects "a pattern of dubious tactics" performed by Huawei to obtain technology from rivals, particularly Apple's China-based suppliers. According to a Huawei spokesperson the company has not been in the wrong: "In conducting research and development, Huawei employees must search and use publicly available information and respect third-party intellectual property per our business-conduct guidelines."

According to the U.S. Justice Department, Huawei is said to have a formal program that rewards employees for stealing information, including bonuses that increase based on the confidential value of the information gathered. While the theft of trade secrets is nothing new among technology companies, the new allegations against Huawei represent "a more brazen and elaborate system of seeking out secret information," The Information reports.

Huawei's information gathering program led to incidents like the Huawei engineer probing a supplier for Apple Watch details, as well as Huawei copying a component of the MacBook Pro. Specifically, the company built a connector for its MateBook Pro that was just like the one used in Apple's MacBook Pro from 2016, allowing the computer's hinge to be thinner while still attaching the display to the logic board.

Huawei reportedly approached numerous suppliers and provided them with schematics just like Apple's, but most recognized the part and refused to make it for Huawei. The company told The Information that it requires suppliers to uphold a high standard of ethics and that it doesn't seek or have access to its competitor's confidential information. Eventually, Huawei found a willing supplier and the connector was built into the MateBook Pro.

The Information's report includes numerous other examples of Huawei's attempts at stealing information from Apple. One former Apple employee interviewed for a job at Huawei immediately after leaving Apple, and in the interview, Huawei executives repeatedly asked questions about Apple's upcoming products. "It was clear they were more interested in trying to learn about Apple than they were in hiring me," the former employee said.

Huawei's indictments extend far beyond Apple, including an accusation of bank and wire fraud against chief financial officer Meng Wanzhou, lying to the government, destroying documents, and attempting to move key Huawei employees back to China to impede the U.S. Justice Department investigation. Another indictment accused Huawei of stealing trade secrets, wire fraud, and obstructing justice for stealing robotic technology from T-Mobile U.S. for testing smartphone durability.

Tags: Huawei, DOJ

This article, "Huawei's Efforts to Steal Apple Trade Secrets Include Employee Bonus Program and Other Dubious Tactics" first appeared on MacRumors.com

Discuss this article in our forums

U.S. DoJ Charges Chinese Smartphone Company Huawei With Stealing Trade Secrets and Fraud

The United States Justice Department today announced a series of criminal charges against Chinese smartphone maker Huawei for stealing trade secrets, bank fraud, wire fraud, and obstructing justice.

In the first of two indictments unsealed this afternoon, the Justice Department accuses Huawei, Huawei chief financial officer Meng Wanzhou, and two affiliates of bank and wire fraud.


Huawei is said to have misled a global bank and U.S. authorities about its relationship with subsidiaries Skycom and Huawei Device USA to conduct business in Iran despite sanctions, conducting millions of dollars in business. Huawei is accused of lying to the government, destroying documents, and attempting to move key Huawei employees back to China to impede the investigation.

A second indictment accuses Huawei of stealing trade secrets, wire fraud, and obstructing justice for stealing robotic technology from T-Mobile U.S. for testing smartphone durability.

Huawei violated confidentiality agreements with T-Mobile when it stole information on "Tappy," a T-Mobile robot designed to mimic human fingers to test smartphones back in 2012. Huawei employees secretly took photos of the robot, measured it, and stole components. T-Mobile won a $4.8 million lawsuit against Huawei in 2017 over the dispute.

All in all, the U.S. filed 10 charges related to trade secrets for the T-Mobile theft and 13 charges related to sanction violations against Huawei. The U.S. is seeking the extradition of Huawei CFO Meng Wanzhou from Canada, where she was arrested in December.

FBI Director Christopher Wray said that the charges levied against Huawei "expose brazen and persistent actions to exploit American companies and financial institutions and threaten the free and fair global marketplace."
As you can tell from the number and magnitude of the charges, Huawei and its senior executives repeatedly refused to respect U.S. law and standard international business practices. Huawei also intentionally and systematically sought to steal valuable intellectual property from an American company so it could circumvent hard-earned time consuming research and gain an unfair market advantage. [...]

As Americans, we should all be concerned about the potential for any company beholden to a foreign government - especially one that doesn't share our values -- to burrow into the American telecommunications market. Today's charges serve as a warning that the FBI does not - and will not -- tolerate businesses that violate our laws, obstruct our justice, and jeopardize our national security.
The charges filed today against Huawei will likely escalate U.S.-China tensions, though the Department of Justice said that the indictments are "wholly separate" from trade negotiations with China, which are set to continue this week.

The U.S. has already banned government employees and contractors from using devices from Huawei and ZTE, and legislation has been introduced that would ban the export of U.S. parts and components to Chinese telecommunications companies in violation of U.S. export control or sanction laws.

Huawei is the largest smartphone manufacturer in China and a major Apple competitor in the country. Few Huawei products are available in the U.S., however, because of the aforementioned cybersecurity concerns.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.


This article, "U.S. DoJ Charges Chinese Smartphone Company Huawei With Stealing Trade Secrets and Fraud" first appeared on MacRumors.com

Discuss this article in our forums

U.S. Justice Department Files Lawsuit to Block Merger Between AT&T and Time Warner

The United States Justice Department today filed a lawsuit to stop a planned merger between AT&T and Time Warner, reports Bloomberg. The DOJ believes such a merger would result in higher bills and fewer options for consumers.
"This merger would greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy," said Makan Delrahim, the head of the department's antitrust division.
According to Bloomberg, this is the first time in several decades that the DOJ has sued to block a vertical deal, aka a merger between two companies that do not directly compete with one another. The lawsuit comes following a request from antitrust head Delrahim that the two companies sell either the Turner broadcasting unit or DirecTV, which AT&T refused to do.

Given that the DOJ does not usually step in to block vertical deals, it is unclear how this legal battle will play out in court. Other similar deals, such as Comcast's purchase of NBC Universal, have gone through after certain conditions have been put in place.

AT&T and Time Warner have been in talks over a merger since late 2016, with AT&T planning to shell out $85.4 billion for Time Warner.

AT&T says the DOJ's lawsuit is a "radical and inexplicable departure from decades of antitrust precedent," and that it is confident the court will reject the claims and allow the merger to proceed.

Apple at one time was rumored to be interested in a Time Warner purchase and was said to have monitored the deal between AT&T/Time Warner closely, but Apple ultimately had no interest in Time Warner or outbidding AT&T.


Discuss this article in our forums