The AI industry is still reeling from Nvidia CEO Jensen Huang’s honeypot scandal, but some in the industry see it as an issue that’s much larger than one man.
The Chinese government has been active in economic espionage for decades, and with semiconductors at the center of the AI boom, there’s intense pressure to infiltrate any company involved. At the same time, many of the executives getting rich off that boom have made themselves easy targets.
As CEO of investment intel firm Heron Intelligence, Nate Singer has a unique view into the problem. His firm works on corporate due diligence: Essentially, making sure companies know the relevant dirt before making a major acquisition or executive hire. And while the Nvidia case is particularly severe, Singer says there are lots of similar cases in the semiconductor industry that have stayed under the radar.
“We’ve got former employees talking about behavior at senior executive levels,” Singer told TechCrunch, saying executives are “really crossing lines that should not be crossed.”
In a widely circulated LinkedIn post, Singer detailed one case in which a CEO’s wife made an unexpected board room appearance, “screaming about her husband and another company exec flying around in the corporate jet with a couple young ladies (who also turned out to be state-sponsored actors).”
It’s an alarming story, but an unfortunately common one. Singer says he’s seen at least three reports of similar cases, and suspects many more have gone unreported.
“There’s a lot more than this one woman,” Singer said. “They are embedded in these companies.”
Semiconductor companies are already big targets for international trade secret theft. There have been dozens of prosecutions for similar cases in recent years, including a case involving the fabrication powerhouse TSMC in 2007.
In 2017, four executives at an unnamed “Bay Area semiconductor equipment manufacturer” were charged with stealing trade secrets for use at a competing company in China. According to the indictment, the technology in question “related to the high-volume manufacturing of semiconductor wafers to be used in lighting and electronic devices, such as flat screen televisions and smart phones.“
Any sexual elements in such cases rarely become public, in part because of the severe consequences for executives and their companies. But according to Singer, the ongoing threat has become a kind of open secret in the industry.
“There are a lot of senior people in the industry that know this is happening, and are effectively condoning it,” he told TechCrunch.
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