Posted on April 25, 2005

The Spies in the Next Cube

Birgitta Forsberg, San Francisco Chronicle, Apr. 25

When Shin-Guo Tsai gave notice of resignation from his job as a design engineer at the Fremont semiconductor company Volterra on Feb. 15, he allegedly told his manager that he was returning to Taiwan to get married and that he didn’t have a job lined up.

The story was a smoke screen, according to the FBI. Tsai, the agency alleges, had downloaded information on Volterra products. The FBI accuses him of using a private e-mail account to send some of the information to a Taiwanese startup company that was recruiting him for a job.


When it comes to cross-border theft of trade secrets, there are more foreigners spying on U.S. corporations than ever, according to Todd Davis, an FBI supervisor in Sacramento.

“Corporate America ought to be darned worried,” Davis said. “If you are a major corporation with very sensitive technology, you have been targeted. Somebody is spying on you right now.”

When corporate spies come to America, they tend to flock to Silicon Valley.

“We have prosecuted more theft of trade secret cases than any other district in the country,” said Christopher Sonderby, chief of the Computer Hacking and Intellectual Property Unit of the U.S. attorney’s office in San Jose.

His computer hacking unit was founded as the country’s first such entity in February 2000. There are now 18 such units in U.S. attorneys’ offices nationwide.

“Silicon Valley has more than 7,000 technology-based companies. It is home to the largest concentration of technology expertise in the world . . . and there is a substantial temptation for some businesses and companies to acquire this technology by illegal means,” he said.

Many thefts kept quiet

Davis estimates there have been about 20 to 30 cases in the past 10 years, including both domestic and cross-border industrial espionage incidents. A lot of cases, however, are never reported because many companies handle the incidents quietly to avoid publicity.

The FBI has a list of about 20 countries that actively spy on U.S. companies, according to corporate security consultant John Case, who does not want to name any countries.

Davis acknowledges there is such a list, but he declined to mention which countries are on it.

“Certain countries are doing their darnedest to gain economic superiority, and we are the No. 1 target for all corporate and international spying,” Davis said.

He did mention China, without confirming that it is on the list.

“PRC, the People’s Republic of China, has been accused of setting up small firms” that act as front companies, he said.