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Apple's self-driving secrets almost handed to Chinese rival

Former employee arrested as he was about to board a flight to China

Details of Apple’s research and development for self-driving cars are a closely guarded secret.    © Reuters

PALO ALTO, U.S. -- News broke on Tuesday that a former Apple employee tried to steal the company's self-driving technology and hand it to a Chinese company.

Three days earlier, at Silicon Valley's Mineta San Jose International Airport, former hardware engineer Xiaolang Zhang was surrounded by U.S. Federal Bureau of Investigation agents. He had just cleared security checks and was preparing to board a flight to Hangzhou, China, via Beijing.

"Would you mind stepping aside?" the officials said, taking Zhang away for questioning.

The arrest portrays the vicious tug of war over self-driving technologies across the globe. That Zhang was attempting to join a Chinese company with the secret technology in hand will only aggravate the friction between China and the U.S.

According to the indictment released by the FBI, Zhang was hired by Apple in December 2015 to work on a project to develop software for use in autonomous vehicles.

"Although Apple has made general statements to the press about being interested in autonomous vehicle development, the details of Apple's research and development for the project are a closely guarded secret that have never been publicly revealed," the court filing said.

Zhang had access to confidential data.

In April, he had flown to China for a month after the birth of his child. Upon returning to Apple, he told the company he was resigning to care for his mother in China.

Growing suspicious over the chain of events, Apple looked into the situation deeper and found that Zhang was intending to join Xiaopeng Motors, an electric vehicle and self-driving startup headquartered in Guangzhou. Apple immediately had Zhang return the devices loaned to him, including a PC and smartphone, and blocked his access to the company's internal information system.

An electric vehicle of Xiaopeng Motors Xiaopeng Motors has little presence in the autonomous driving area.   © Imaginechina/AP

But at 9 p.m. on April 28, just before his clearance was revoked, Zhang allegedly entered the office and retrieved secret data from the system. When Apple investigated Zhang's data transfers, it showed a surge in transmissions -- double the average amount observed in the past nine months -- on April 28-29.

About 60% of the stolen data was deemed "problematic," according to Apple, and included information that the company has registered as intellectual property. Engineering schematics, technical manuals and technical reports are among the other information Zhang is believed to have stolen.

Xiaopeng Motors, the company Zhang was preparing to join, has little presence in the autonomous driving area. It does have an office in Silicon Valley, but when this reporter visited on Tuesday, there seemed to be few people inside. Just a small office on the fringe of a commercial district, the site has no experimental cars such as the ones seen at the offices of Google and General Motors.

The company made headlines in the past for drawing investment from Alibaba Group Holding. It recently succeeded in raising $700 million in funding. But it is not clear if it has the expertise needed to drive innovation in the highly competitive self-driving field. A quick web search shows that the company is recruiting engineers with expertise in digital maps and machine learning for autonomous driving.

Xiaopeng Motors' base in Silicon Valley A former Apple employee allegedly stole secret data on self-driving technology from the company just before he planned to join Xiaopeng Motors, a Chinese self-driving startup. (Photo by Toyoki Nakanishi)

A similar theft of trade secrets occurred in 2015, when Uber Technologies targeted Google's radar technology. Uber and Google reached a settlement in the case in February, but the court hearing exposed the pressure Uber had been under to keep up with self-driving technology.

Whether the latest case involving Xiaopeng Motors was the result of a Chinese startup eager to leapfrog development phases, or was influenced by the Chinese government's will to promote self-driving technology, or was something that Zhang did on his own, is unclear. In any case, U.S. companies will only be more wary of the Chinese companies dotting Silicon Valley.

One surprise that has emerged from this incident is the scale of Apple's research into self-driving technology.

Although Apple has not disclosed any information about its self-driving technology project, FBI documents revealed that 5,000 of the company's roughly 135,000 full-time employees had access to self-driving data.

While Apple is a relative newcomer to self-driving compared with Google and others, the iPhone maker may have already accumulated enough expertise to be concerned about technology leaks.

The current trade friction between the U.S. and China stems from competition over cutting-edge technology. In the telecommunications sector, U.S. politicians have homed in on Chinese tech companies Huawei Technologies and ZTE on national security grounds.

Now Apple has been thrust into the spotlight.

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