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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.
Why go to the effort of tearing one apart and reverse engineering it when you can just ask somebody for the info?
A friend of mine did a job interview at Huawei and the interview was basically "tell us how you would design a node-b". My friends response was "hire me and I'll tell you, but for an interview that's not an appropriate question". This was over a decade ago. This is well documented behavior by this company.
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
Chances are the Chinese build the watches so the actual assembly is something they could get more easily at home but some of the specialized sensors are going to be much more difficult for them to figure out.
Anyone having anything built over there has to be damn careful! A friend has some automotive parts built over there. He intentionally designed the parts so it's not obvious what they will be used in and he designed them to fit more than one application with just some machining needed to fit one car or another. He told me that he bet it wouldn't be more than 3 months before they would be trying to sell his stuff. Sure enough parts showed up on Ali-Baba within 2 months! Jokes on them, they don't know about the needed machining he only did in-house and those parts aren't going to fit jack shit! :-) He had a good laugh over it but it was really surprising to see how fast they figured out what this was for and tried to sell it. There's a saying, their manufacturing plants run three shifts, two for you and one for them and it doesn't seem to be far from the truth...
Build it, Drive it, Improve it! Hybridz.org
https://www.popularmechanics.c...
Make sure you note the date on that article. This has been going on a long time! Another anecdote, company I knew manufactured DVD and CD, one of the contracts they bid on was to do the service manuals for the DOD but they kept getting underbid. They knew damn well there were VERY few US companies left that could do this and couldn't figure out how they were being underbid. They finally figured it out - a Chinese company was being used to make the media with a front company setup in the US. It took them ages to get the DOD to wake up and figure out they were sending the repair manuals for a ton of our shit over to China to have the damn DVD made. Good grief, why not have them produce our missiles too? Sheesh! Obviously years ago but man we've done some stupid stuff
Build it, Drive it, Improve it! Hybridz.org
1. "tearing one apart and reverse engineering it" would give you a lot more details than asking someone out of their memory.
2. asking interviewee for info is pretty prevalent in the Silicon Valley. for one, the company asking does not sign an NDA. it is the interviewee who has signed the NDA and hold the responsibility to guard such secrets.
3. in this country, this kind of things all come down to arguing over fine points by highly paid lawyers.
I don't mean to be rude to you, but that is how a lot of people outside of product design and manufacturing think.
As an (ex)engineer, I'm often more impressed by *how* Apple (and their suppliers) make things than *what* they make. For example, the (steel) front bezel on the original iPhone was something that looked basically unmanufacturable to me: for a start, you can't hold the same tolerances on a steel casting as a plastic part, so it was astonishing that the back plastic clamshell and the steel bezel met almost seamlessly.
Turn out that Apple were making the back clamshell in a number of different sizes (three, I hear) and the bezel in a single size. They finished the bezel and then used an optical system on the production line to pick out which parts would fit with which plastic clamshells.
It's an extremely unusual process that involved a lot more up-front investment in technology and process, but gave the result their designers wanted and the customers thought was 'pretty neat'. So Huawei want to know about those optical systems, as well as what's inside an Apple watch.
Tear-downs won't tell you anything about a lot of the most interesting solutions that a designer had to devise: Toyota used to famously say that they weren't designing cars, they were designing a process to make cars.
'This writing business. Pencils and what-not. Over-rated if you ask me. Silly stuff. Nothing in it' - Eeyore
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.
I worked at the GE Appliance Park in Louisville, KY. They have an entire team that does nothing but tear down competitors appliances to see how they are put together. They are also nonchalant about their competitors doing the same. It is just what everybody does.
Aah, change is good. -- Rafiki
Yeah, but it ain't easy. -- Simba