China cracks down: Huawei ex-employees get prison for stealing chip secrets to launch rival startup Zunpai

China has given punishment to 14 people who used to work at Huawei. They took secret chip information from Huawei and used it to start a new company called Zunpai, as reported by the South China Morning Post. This was seen as a serious act of cheating and breaking trust.

A court in Shanghai has sentenced the group, but the official details of the punishment (like the final jail time and fines) haven't been published online yet. However, insiders say they will face financial penalties and up to six years in jail for their actions, as per the report by tom’sHARDWARE.

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Zunpai founder lured Huawei staff with high pay and perks

The founder of Zunpai, Zhang Kun, was once a researcher at Huawei's chip arm, HiSilicon. He quit in 2019 and later founded Zunpai in 2021. Zhang reportedly lured ex-Huawei staff with high salaries and attractive stock options—but allegedly asked them to steal secrets before quitting Huawei.

Huawei found out about this and filed a lawsuit in August 2023, taking the issue to court. In December 2023, Shanghai police arrested the 14 ex-Huawei employees for stealing chip technology secrets. At the same time, the government froze 95 million yuan ($13.1 million) worth of Zunpai’s assets, as mentioned in the report by tom’sHARDWARE.

Police arrested 14 people and froze over $13 million in assets

Investigators found that 40 technologies used by Zunpai were almost the same as Huawei’s, showing clear evidence of intellectual property theft. The police said that China wants to protect companies that create new things in a fair way and stop the stealing of technology to keep business competition honest.

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This case is being talked about a lot in China. People are discussing how stealing company secrets can harm businesses and why it’s important to keep those secrets safe. Even though Huawei is the one hurt in this case, the company has not said anything in public about the court decision or the arrests, as reports say.

Usually on the receiving end of allegations of breaking rules and putting secret access in its devices this time Huawei had someone wrong them. Meanwhile, Huawei is also in the news for opening a huge new 2,600-acre R&D center in Shanghai, showing its growing focus on tech development, according to the report by tom’sHARDWARE.

FAQs

Q1. Why were Huawei ex-employees arrested in China?
They were arrested for stealing Huawei’s chip secrets and using them to start a rival company, Zunpai.

Q2. What punishment did ex-Huawei staff get for stealing chip secrets?
They face up to six years in jail and financial fines, though the court’s full verdict is not public yet.