Huawei in Spying Flap

Light Reading
Supercomm News Analysis
Light Reading
6/24/2004



A major equipment vendor is accusing a Huawei Technologies Co. Ltd. employee of corporate espionage following an incident that occurred after the Supercomm exhibit floor closed on Wednesday, Light Reading has learned.

Sources close to the situation say the Huawei worker was caught at a competitor's booth where he was examining circuit boards taken from the vendor's displayed gear and taking photographs of the company's products.

Supercomm security was called and the vendor confiscated the Huawei worker's camera Memory Sticks and took photocopies of his passport, visa, and several pages of notes. On the worker's exhibitor badge, the company's name was listed as "Weihua," which a source interpreted as an attempt to obscure his employer. Supercomm management stripped the worker of his credentials and told him to leave the area.

The employee -- a technical engineer named Yi Bin Zhu -- says the incident is a misunderstanding. Zhu spoke to Light Reading through an interpreter on Thursday at Huawei's Supercomm meeting room. He says this is his first time traveling outside of China and he was not aware that photography was prohibited on the Supercomm show floor.

Zhu says the incorrectly listed name on his exhibitor badge was also a misunderstanding. He says the Chinese custom of listing surnames first caused him to fill out his show paperwork incorrectly, resulting in the mangled name.

But there was plenty more to explain. Zhu's notes contained two pages of proprietary diagrams of an AT&T Corp. (NYSE: T) central office, a source familiar with the documents says. Also in his possession was a list of several vendors he had either visited or was about to visit, the source says.

The vendors on Zhu's list included Ciena Corp. (Nasdaq: CIEN), Lucent Technologies Inc. (NYSE: LU), Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), "Nothtel," Fujitsu Network Communications Inc. (FNC), White Rock Networks Inc., and Turin Networks Inc. Two specific products were singled-out in the list: FNC's Flashwave 4300 and Nortel's Optical Multiservice Edge 6500.

The contents of Zhu's Memory Sticks included photographs of the FNC 4300, with its casing removed, as well as some video clips of various company Supercomm presentations that were taken from what one source calls "surreptitious angles."

Zhu says his notes were just a guide to the vendors he was interested in. He denied pulling out any vendor's circuit boards to have a closer look.

David Swanston, Supercomm's director of communications, says that with more and more sophisticated devices, unauthorized photography is difficult to stop. "You can't prevent all of it," he says. "But we will prevent all we can."

At least two vendors on Zhu's list, upon being contacted by Light Reading on Thursday, say they're looking into what legal options are available.

In the past, Huawei has been accused of stealing intellectual property from Cisco Systems Inc. (Nasdaq: CSCO). Huawei's own investigation found that rogue developers were at fault, concluding that the incident was isolated (see Cisco & Huawei Extend Stay). — Phil Harvey, News Editor, and Peter Heywood, Founding Editor, Light Reading; and Ray Le Maistre, International Editor, Boardwatch

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