Huawei Accused of Seizing Solid State Drive Technology From Joint Chinese-U.S. Startup

October 23, 2018 Updated: October 23, 2018

CNEX, an American startup company, has accused Chinese electronics giant Huawei of forcing it to divulge key technology related to solid state drives (SSD), a next-generation form of data storage.

Yiren Huang, also known by his Anglicized name Ronnie Huang, the Chinese-American co-founder of CNEX, has filed a lawsuit against Huawei and its U.S.-based subsidiary FutureWei.

In his 80-page court filing, submitted to a federal court in Texas, Huang said that the two firms were engaged in “a corporate espionage campaign orchestrated to steal intellectual property from American technology companies.”

Last December, Huawei had sued CNEX and Huang on claims that they had stolen its trade secrets on semiconductor technology. Huang says that FutureWei hired him in 2011 with the sole intent of acquiring his SSD-related know-how.

“Huawei and FutureWei (the US R&D subsidiary of Huawei Technologies) have served as critical participants in a corporate espionage campaign orchestrated to steal intellectual property from American technology companies, like CNEX, in hopes of surpassing the United States as the world’s predominant technological superpower by 2025,” Huang said in his court filing

Huawei, the world biggest telecommunication equipment supplier, hasn’t offered a response filing so far.

According to his Linkedin profile, Yiren Huang was born in China and graduated from Shanghai Jiaotong University. He attended Michigan Technological University in 1997 and received an M.S. degree in 1998.

Huang worked for Cisco Systems, SandForce, and Brocade in SSD design before he joined FutureWei in January 2011 in Santa Clara, California. FutureWei is headquartered in Plano, Texas, and employs more than 1,000 people at multiple locations across North America. Huang was employed at FutureWei networking and SSD research.

Compared with traditional hard disk drives (HHD), SSDs process data at much higher read speeds, require less power, and are quieter. While still expensive and impossible to recover data from if broken, SSDs have no moving parts and are thus durable and resistant to shock damage. The durability and speed associated of SSDs gives them a massive qualitative edge over HDDs.

After Huang joined FutureWei, he tried unsuccessfully to sell his own intellectual property to the company. In his filing, Huang said that FutureWei then asked him to sign an employment agreement containing an unlawful term that would have forced him to transfer ownership of his intellectual property to FutureWei. Huang did not sign the agreement and resigned in May 2013.

The following June, Huang co-founded CNEX Labs in San Jose with Alan Armstrong and others. Armstrong is CEO of the company; Huang worked in its Engineering team and has been XNEX chief technology officer since this January.

After founding CNEX, Huang transferred all nine of his patents and 13 pending patents to the company, which then received funding from Microsoft Venture, Sierra Ventures, DELL Technologies Capital, Walden International, and other companies.

Huang said that FutureWei sought to obtain technological know-how from CNEX on multiple occasions. In one case, FutureWei employees pretended to be potential clients and contacted CNEX in an attempt to gain access to its intellectual property.

In December 2017, Huawei and FutureWei sued CNEX and Huang on the grounds that Huang had used information he obtained through his employment at FutureWei along with FutureWei’s resources and technology” to draft the patent applications he used for CNEX, according to Huawei.

Huawei also accused Huang of poaching 14 FutureWei employees to work for CNEX, one of whom had been caught downloading confidential documents before leaving FutureWei. While CNEX has confirmed that the 14 individuals were former staff at FutureWei, it has denied hiring them for Huawei’s technological data.

Earlier this month, Huawei asked CNEX to hand over “detailed engineering specifications, testing plans, source code design documents, source code flow charts, hardware design documents and schematics, hardware and software bug status reports, engineering personnel responsibility designations, client product delivery details, and production schedules,” via the court, the Wall Street Journal reported.

CNEX and Huang say that Huawei’s request amounts to theft.