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Huawei's Efforts To Steal Apple Trade Secrets Include Employee Bonus Program and Other Dubious Tactics: Report (macrumors.com)
In a report published Monday, The Information [paywalled] has detailed tactics used by China's Huawei to steal Apple's trade secrets. These tactics include Huawei engineers appealing to Apple's third-party manufacturers and suppliers with promises of big orders, but instead using the opportunity to pry on processes specific to iPhone-maker's component production. From a report: 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.
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.
Because it's alot easier and better to copy chips that are still in the process of being made, than ones that are already built and glued together.
They're not interested in the technical components; China has always been good at replicating that portion. They're interested in the manufacturing process - how things are made, integrated, and put together. That's the part that China needs to learn.
China only really knows how to make things manually in many areas, and doing something complex, say like building a plane, or making your own apple watch is rather challenging without the understanding of how it is made. In short, the process of making and designing the product is as valuable as the product itself to China.
I won't say what they manufacture but it's not electronics. Chinese company contacts them, says they want to buy some of their uber expensive stuff but could they come inspect it first? Sure thing! Several of the intended visitors unable to get visas... finally the TEAM of people shows up to inspect the product but want a TOUR of the factory. No sir, not allowed. Brings them to a room that's been walled off just for the inspection but members of this team keep trying to wander off and have to be corralled. Light no good, can't we do this somewhere else? Nope, here's more light! Table not flat enough for measurements don't you have someplace else we could do this? Nope, her'e s apiece of float glass deal. Finally they get frustrated and leave. Weeks later State Dept calls all freaked out by the team of scientists that visited - hmm! They explain the measures they took to the great relief of State Dept dude but he warns other folks might call and to just explain WTF. I ask friend about their network security - umm not good :( He tells me stories of employees plugging "music players" into production equipment USB ports to "charge them" and bringing the line to a halt as they got "infected". I swear sometimes we are our own worst enemy They did at least stop the direct physical inspection! I'm betting their network is owned up one side and down the other though...
Build it, Drive it, Improve it! Hybridz.org
In the very first year Huawei started to operate in Brazil, I was working for Siemens Telecommunications. We got very surprised to discover Huawei was getting contracts from our long term clients and Siemens was being left aside. Somene was able to get a hold of the equipment that has been sold and was operating in the customer and took many pictures of it working. We were surprised to found out Huawei had cloned all Siemens hardware and even the operating system for the devices, they did not even changed the prompt design, only replaced "Siemens" by "Huawei". And charged 70% cheaper than us. Nice company.
Actually, all of Asia is. The concept that companies shouldn't steal secrets from each other simply doesn't exist in Asia. The notion that you can protect an idea using a patent or copyright or NDA or non-compete agreement is alien. In Asia, if a company wants to protect its secrets, it should work to protect those secrets. If their secrets get stolen, people figure its their own fault for not protecting them well enough. Corporate espionage is the norm. You may have seen this in anime or manga, where an employee is required to infiltrate another company to spy on them. The employee can be fired if they refuse.
When East meets West, you have a bunch of naive westerners blissfully running head-first into espionage methods which have been honed for over a century. It's a lot like how it must've been when the native Americans with bows and arrows were slaughtered by European firearms. Westerners have never put much thought into protecting themselves from this type of direct espionage because they've always been coddled and protected by their social norm that it was inherently wrong for companies to steal secrets from each other. So they will blissfully plug in their devices to recharge during a visit, or hand them over for "security checks" at the airport (during which the hard drive is removed and an image is made), or install a state-of-the-art manufacturing tool relying on a few screws holding the cover in place to protect the secrets that are held within.
A good example is China's high speed rail. China had no knowledge about how to construct high speed rail. They opened up bidding to foreign companies, dangling the carrot of building thousands of miles of track and trains. TGV wisely passed. Siemens took the bait. They inked a deal where Siemens would manufacture trains for China for a few years, but with the curious stipulation that the manufacturing had to be done in China. Siemens probably thought that after a few years, they'd be facing bids from other high speed rail companies again. What actually happened was the Chinese strip-mined everything they could from Siemens' manufacturing processes in China, duplicated it on their own, and gave Siemens the boot once the period of the original agreement was up.
It gets a little hard to do that when you have a computerized system that tracks the activity of a country's citizens, scores them for how "appropriate" their beliefs, statements and associations are, and restricts their rights based on that.
You might see how countries that don't do that might be concerned about a country that does something like that trying to achieve dominance or parity. It will not be good for global freedom. And yes, freedom means something other than eagles and Michael Bay films.
By the way, the whole argument that the United States should shut up about this because they did it in the past is flat out stupid. People in the United States stole industrial secrets because it was in their best interest to do so. People in England tried to stop them because it was in their best interest to do so. People in the United States now should try to stop people from stealing their secrets because it is in their best interest to do so. It's as simple as that.