The US has arrested a former Apple employee who allegedly tried to abscond with sensitive proprietary information from the company's closely guarded self-driving car project, according to the Financial Times. Xiaolang Zhang, who had recently left his position at Apple under suspicious circumstances, was arrested by FBI agents as he tried to board a plane bound for mainland China.
Zhang joined Apple in December 2015, and was arrested on July 7. US prosecutors allege that he had downloaded sensitive information about the company's self-driving car research without permission. During his time at the company, Zhang worked "to develop software and hardware for use in autonomous vehicles."
The charges against Zhang represent the latest in a series of arrests made by federal authorities of Chinese spies carrying out what the US government calls "economic espionage" that date back to 2006.
And with President Trump intensifying efforts to stop China from extracting intellectual property from foreign corporate partners trying to gain a foothold in Chinese markets, it's hardly surprising that China is stepping up its espionage programs. Zhang initially aroused suspicion when he told Apple that he would be returning to China to take a job with Xiaopeng Motors, a Chinese electric-car startup that also has offices in the Bay Area.
The complaint against Mr Zhang said about 5,000 of Apple’s 135,000 full-time employees have security clearance for Titan, although that figure may include staff across the company working on artificial intelligence technology, as well as hundreds of people working on the car project itself.
Mr Zhang allegedly told Apple on April 30 that he intended to resign after returning from paternity leave. He told his supervisor he was moving back to China to be closer to his mother, who he said was ill. Later in the meeting, he said he intended to work for XMotors, according to the filing on Tuesday.
His comments apparently raised the suspicions of his supervisor. Mr Zhang was asked to turn over his Apple-owned devices and escorted from its campus, his network and building access revoked, the filing said.
Apple began an internal investigation and allegedly found he had downloaded information about its autonomous vehicle project. CCTV footage showed he had also taken a large box from Apple’s self-driving car lab shortly before informing his supervisor about his resignation, the US government claimed.
After his arraignment on Monday, a judge ordered that Zhang be held until his trial, presumably because he presents a serious flight risk (Chinese authorities would
US prosecutors alleged he had downloaded information from a database for Apple’s self-driving car project - including data on power requirements, battery system and drivetrain suspension mounts - shortly before informing Apple in April that he was resigning.
He allegedly told the company he intended to return to China and take a job with Xiaopeng Motors, a Chinese electric car start-up with offices in Guangzhou and Palo Alto, California.
Mr Zhang appeared in court in San Jose, California, on Monday and was remanded in custody, according to a separate filing. He was assigned a public defender, who did not immediately return a call requesting comment.
Xiaopeng Motors, also known as XMotors, did not immediately respond to requests for comment. According to the filing on Tuesday, Mr Zhang claimed to have joined XMotors’ California office after leaving Apple.
Not much is publicly known about Apple's secretive self-driving car program, codenamed Project Titan. According to the FT, it's presently focusing on the underlying software for autonomous cars.
Details started to emerge about Apple’s secret project to create an electric vehicle in early 2015, as it poached staff from carmakers including Tesla and Mercedes-Benz. Since then, Apple has rarely discussed its plans but regulatory filings, including its permit to test autonomous vehicles in California last year, have hinted at its strategy.
Codenamed Project Titan, the effort underwent a shift in strategy in mid-2016, after its initial leader Steve Zadesky was replaced by Apple veteran Bob Mansfield.
At the moment, Apple is focusing on developing the underlying systems required for autonomous driving, rather than the vehicle itself. That includes a plan to test a self-driving shuttle to ferry employees around its offices in Silicon Valley.
As the US said in the document unveiling its latest round of proposed tariffs, the Trump administration has been seeking to stymie China's "Made in China 2025" plan - a government-backed initiative to establish China as a leader in several key industries like artificial intelligence - at every turn. Under Trump, the US has been more aggressive about blocking Chinese companies attempting to acquire US firms in an effort to siphon off their valuable technology. So China has been working on other methods for surreptitiously stealing the technology.
"Apple takes confidentiality and the protection of our intellectual property very seriously," an Apple spokesperson said. "We’re working with authorities on this matter and will do everything possible to make sure this individual and any other individuals involved are held accountable for their actions."
XMotors, Zhang's erstwhile employer, is one of the dozens of startups working on electric and autonomous vehicles in Silicon Valley. Its purported involvement in the espionage case is made even more galling by the fact that its backers include some of the most well-known Chinese firms like Alibaba. This year, the company hired a former senior banker at JPMorgan to be the company's vice chairman and president. WSJ reported on Wednesday that China is considering other methods of retaliating against President Trump in the battle over trade, including holding up licenses for US firms operating in the Chinese market, to enforcing customs delays while also delaying approval of deals like Qualcomm's planned takeover of NXP Semiconductors.
By some estimates, China has 20,000 intelligence operatives embedded in the US ready to commit economic espionage at every conceivable opportunity. China also employs sophisticated hackers like the group that recently infiltrated a military contractor and stole military secrets. And as trade tensions intensify, expect China to press its espionage advantage as President Xi Jinping is determined to make "Made in China 2025" a resounding success.