FBI Allegedly Ran Sting Operation on Huawei at CES

FBI Allegedly Ran Sting Operation on Huawei at CES

Huawei is one of the largest smartphone makers in the world, but the company is currently embroiled in a number of US government investigations that could have dire consequences for the Chinese company. The Justice Department investigation targeting CFO Meng Wanzhou and the company as a whole for violating Iran sanctions is the most pivotal, but the FBI is also looking into whether the company tried to steal a diamond screen coating technology from a US startup. The agency allegedly went so far as to set up a sting operation at CES several weeks back.

The story starts with Akhan Semiconductor, a company founded by Adam Khan to develop electronics and other materials using thin-film synthetic diamond. One of the company’s products, which it hopes to commercialize soon, is known as Miraj Diamond Glass. According to the company, it’s six times stronger and 10 times harder than Gorilla Glass thanks to a thin layer of synthetic diamond on one side. Naturally, Akhan sees smartphones as a prime application, so it approached several companies about a partnership. Huawei responded, and Akhan sent out a sample.

Diamond coatings like the one used by Akhan are considered sensitive under the International Traffic in Arms Regulations (ITAR) because of the potential defense applications. So, Akhan had to work out specifics with Huawei before shipping the sample to its California lab. Not only did Huawei miss the deadline for sending the material back last summer, but it returned the 4-inch square panel in pieces, and some pieces were missing. Was Huawei trying to steal the technology?

Khan and COO Carl Shurboff asked Huawei what happened, and a representative feigned ignorance. The sample, he said, had been in China. This set off alarm bells because of the potential ITAR violation, so Khan and Shurboff contacted the FBI. The agency took a keen interest in the case, gathering documentation from the company and even shipping the broken sample off to an FBI laboratory for testing.

A sample of Miraj glass.
A sample of Miraj glass.

Several weeks passed, and the FBI rendered a verdict. Khan and Shurboff say the FBI researcher found that the sample had been hit with a 100-kilowatt laser, which is powerful enough to be used as a weapon. The agency asked Khan and Shurboff to continue their contact with Huawei and meet with the company’s representatives at CES in January to record their conversation. A Bloomberg reporter observed this meeting from a distance.

During that meeting, the Huawei representatives denied that sending the sample to China was a violation of ITAR but continued to express interest in licensing Akhan’s diamond glass. The FBI ultimately raided Huawei’s San Diego facility on January 28th, but we don’t yet know if there is good evidence of wrongdoing.

Khan and Shurboff initially wanted to keep the situation under wraps until the investigation ran its course, but a chance meeting with another potential glass customer at CES made that impossible. Shurboff had to give this contact an awkward brush-off because of the sting operation, and the company worried that would affect its ability to license the tech. So, we’re getting one side of the story right now. We’ll have to wait for the rest.

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