Why Chinese spies are sending a chill through Silicon Valley

Tech companies are a growing target for corporate espionage and trade theft

Linwei Ding had been working at Google’s California headquarters for four years when he booked a one-way ticket to Beijing and, on Boxing Day, handed in his notice.

The resignation prompted questions at the tech giant’s security team, which had already been investigating Ding. A few weeks earlier, Ding had insisted he had no plans to quit when he was confronted about unusual activity on his employee account.

After reviewing CCTV footage, investigators found that several weeks earlier the Chinese national had convinced a colleague to scan his access badge at Google’s offices, creating the illusion he was at work.

Ding had, in fact, been thousands of miles away in China – presenting himself as the chief executive of a company called Zhisuan and seeking to raise funds. On January 6, the day before his flight was due to leave, FBI agents raided his house and seized his devices and passport.

Earlier this year, the US Justice Department charged Ding, 38, with stealing trade secrets from Google. Prosecutors said he had uploaded more than 500 files related to Google’s artificial intelligence technology to a personal account in an attempt to launch his own companies in China.

“We will fiercely protect sensitive technologies developed in America from falling into the hands of those who should not have them,” Merrick Garland, the US attorney general, vowed.

Ding has pleaded not guilty. If convicted, he could face decades in prison.

But his case is far from unique. Silicon Valley companies have become a growing target for corporate espionage and trade theft.

In recent years the US government has charged individuals with stealing technology from companies including Tesla, Apple and IBM and seeking to transfer it to China, often successfully.

Last year, the intelligence chiefs of the “Five Eyes” nations clubbed together at Stanford University – the cradle of Silicon Valley innovation – to warn technology companies that they are increasingly under threat.

“If you are operating at the cutting edge of tech in this decade, you may not be interested in geopolitics, but geopolitics is interested in you,” said Ken McCallum, MI5’s director general.

Spying is nothing new in Silicon Valley, which owes its status as an innovation powerhouse to buckets of US government spending during the Cold War, funding processors that could target missiles and put men on the moon.

Soviet agents routinely tried to acquire microchip know-how and plans, although Moscow’s attempts to match US mastery failed. A decade ago, Saudi agents infiltrated Twitter to obtain data on thousands of accounts and unmask dissidents who used the social network to criticise the regime.

But an increasingly assertive China, which has ambitions to match the US as a technology superpower, has radically stepped up its activity.

Beijing’s mission to acquire cutting edge tech has been given greater urgency by strict US export controls, which have cut off China’s supply of advanced microchips and artificial intelligence systems. Ding, the former Google employee, is accused of stealing blueprints for the company’s AI chips.

This has raised suspicions that the technology is being obtained illegally. US officials recently launched an investigation into how advanced chips had made it into a phone manufactured by China’s Huawei, amid concerns it is illegally bypassing a volley of American sanctions. Huawei has denied the claims.

American officials fear that cutting edge chips or AI expertise could boost Chinese military capabilities. A Department of Defense report last year warned that AI could be used to identify US weaknesses and control autonomous weapons.

Last week it emerged that researchers linked to the People’s Liberation Army had used Meta’s technology to develop an AI tool for military applications. Meta has said any such use is “unauthorised and contrary to our acceptable use policy”.

“As controls tighten, China’s incentive to procure off-limits technology increases,” says William Hannas, a former CIA official now at the Centre for Security and Emerging Technology.

Zach Dorfman, an investigative journalist based in the San Francisco Bay Area, says Chinese intelligence has always had a presence in the region due to the substantial Chinese diaspora there. Demonstrations supporting the Falun Gong movement, which opposes the Chinese Communist Party, are frequent sights in the city.

“There has been a decades-long influence campaign to try to change diaspora communities to make them more pro-Beijing. You have a giant community, and there’s always going to be marginal folks who can provide support and local assets that you can have on the ground.

“You’re talking about a tiny fraction of [that] population but you have, potentially, people infiltrating tech companies.”

Attendees at Silicon Valley parties and tech conferences often enjoy gossiping about who in the room might be a spy – the FBI has a regular stand at CES, the world’s biggest tech show.

But only occasionally have cases of people stealing technology explicitly for the Chinese state been made public. In 2018, a former IBM employee was sentenced to five years in prison after being charged with stealing source code for Beijing.

Nigel West, an intelligence expert, says that the theft more often involves Chinese nationals who know they will be able to set up companies back in China with impunity even if they steal technology to do so.

“Virtually all People’s Republic of China citizens who travel abroad and work in technology companies are allowed by MSS [China’s Ministry of State Security] to steal proprietary information, take it back to China and profit from it, either by exploiting it or to run parallel organisations and companies selling the same kinds of products and services,” West says.

“It’s state-sponsored by MSS.”

The pattern is demonstrated by public cases of technology transfer. In June, Klaus Pflugbeil, a Canadian national living in China, pleaded guilty to stealing battery manufacturing secrets from Tesla to set up a business in China.

At least three former Apple employees have been charged with stealing self-driving car secrets from Apple before attempting to flee the US to profit from them. Two have pleaded guilty, while one based in China has not formally responded to the charges.

In recent months, tech companies have reportedly stepped up staff screening in an attempt to counter what is seen as a growing Chinese threat. Last year, the US government launched a “Disruptive Technology Strike Force” designed to prevent high-tech secrets being stolen from companies, although a separate Trump-era “China Initiative” was shut down two years ago amid concerns about racial profiling.

Hannas, the former CIA official, says the West is finally waking up to the problem. “This is not a new problem,” he says. “What’s new is tech companies’ and their national governments’ belated recognition of the threat.”