Intel appointed Lenovo’s Yuanqing Yang to a new advisory board despite his extensive ties to the Chinese party-state.
Intel appointed Lenovo’s Yuanqing Yang to a new advisory board despite his extensive ties to the Chinese party-state.
F oxes in henhouses have nothing on Lenovo CEO Yuanqing Yang.
The United States is grappling with a pandemic-era semiconductor shortage, one that will grow all the more severe if Beijing acts on its threats against Taiwan, which dominates the global chip industry. As Congress moves to pass a massive industrial-policy bill that includes over $50 billion for semiconductor manufacturing, American companies are working to solve this problem. In a move that will boost the resilience of these supply chains, Intel broke ground on two new semiconductor factories in Arizona in September. On Twitter, former national-security adviser Robert O’Brien hailed the move as “an important national security story.”
But Intel’s recent decision to add Yang to its new Government Affairs Advisory Committee opens a potential security vulnerability for the company. When Intel announced the move in June, its statement omitted a troubling part of Yang’s biography: his participation in high-level Chinese political confabs, including the National People’s Congress (NPC) and the Chinese People’s Political and Consultative Conference (CPPCC).
That isn’t unusual for such a high-level business figure in China, nor does it necessarily mean that Yang is taking directions from party leadership. But as general secretary Xi Jinping intensifies a crackdown on private industry, companies like Lenovo face more pressure than ever before to act in the interest of the Chinese party-state.
And Yang’s Lenovo — the world’s largest maker of personal computers — is more susceptible to Beijing’s pressure than most. Taken with the company’s history of cyberespionage scandals, and the CPPCC’s oft-overlooked role as a convening body for individuals the party sees as crucial to its foreign influence campaigns, Intel’s decision to tap Yang is cause for concern.
That decision has not escaped scrutiny in Washington. “In recent years, the U.S. government has rightfully acted to promote secure and diverse supply chains, particularly when it comes to critical technologies such as semiconductors,” Representative Mike Gallagher (R., Wis.) told National Review. “Despite Intel’s critical role in these efforts . . . America will never be able to beat the Chinese Communist Party if actors who owe their power and influence to the goodwill of the CCP are ‘advising’ our leading companies, undoubtedly in ways that seek to reduce our leverage and ability to compete.”
The seven other advisory-committee members include former Pentagon official Michèle Flournoy, Atlantic Council CEO Fred Kempe, former secretary of Homeland Security Janet Napolitano, and former Utah governor and ambassador to China Jon Huntsman. Intel CEO Pat Gelsinger stated that “their insights will help Intel navigate growing complexities in today’s world of social challenges, pandemics and global semiconductor shortages.” But a prominent business leader who owes his continued success to the Chinese Communist Party’s cooperation now plays a role in advising Intel on supply-chain issues.
In a statement to NR, Intel defended its appointment of Yang as part of an effort to gather advice from experts on U.S., European, and Chinese markets, who will serve “as one set of inputs as our corporate leadership and board of directors make decisions regarding Intel’s global business. It is typical for multi-national companies to have advisors located around the world.”
But China’s history of co-opting nominally private companies to do its bidding, and Lenovo’s own apparent role in this, suggests that Yang is anything but a typical adviser.
In December 2019, a report by the Defense Department’s inspector general found that the Pentagon had spent over $32 million on consumer-technology products “with known cybersecurity risks” — including Lenovo laptops. The report noted that the department had not yet prohibited the purchase of Lenovo products, despite “multiple warnings” about the risks from Congress, the State Department, the Department of Homeland Security, and the Joint Chiefs’ intelligence directorate. The report also points out that even after the Pentagon ordered an investigation into the risk posed by Lenovo products, the Air Force still spent nearly $2 million on equipment from the company.
These concerns about Yang’s company are far from theoretical. State banned its employees from using Lenovo laptops on its classified networks in 2006, after reports indicated that they came pre-installed with hardware or software that could be used in cyberespionage. Foggy Bottom is in good company here. The intelligence services of the Five Eyes countries — the U.S., the U.K., Canada, New Zealand, and Australia — have all banned the use of Lenovo products.
Though nominally a private company, Lenovo is a child of China’s military-industrial complex. The computer company was initially formed through the Chinese Academy of Sciences, a massive state-run research consortium that the U.S.-China Economic and Security Review Commission says is connected to military, nuclear, and cyberespionage programs in China. In fact, Lenovo is still a subsidiary of the Chinese Academy of Sciences, as the state research entity holds a significant stake in Legend Holdings, which owns the computer company.
As for Yang’s own pedigree, the commission report noted that he attended China’s University of Science and Technology, which is an outgrowth of the Chinese Academy of Sciences. “The CAS and its individual members have a history of coordinating with the Chinese military, including its cyber and electronic warfare operations,” according to the commission.
Outside of Lenovo computers’ cyberespionage software, there’s no evidence directly implicating Yang in collaboration with China’s military. But Yang has served as a delegate to China’s “two sessions,” the ceremonial legislative sessions that act as an effective rubber stamp on new party initiatives. According to Chinese state-media reports, Yang has served as a deputy to the 13th NPC, where last year he advanced a proposal to develop new data centers, and on the national committee of the CPPCC, in which he has participated since 2008.
“Either way he’s sort of been involved in the party’s efforts to mobilize outsiders to serve their political purposes. He may not be a party member, but he knows where his bread is buttered and he’s working alongside,” said Peter Mattis, a senior fellow at the Australian Strategic Policy Institute. “In one sense you could say, ‘oh, okay it’s an honorary position,’ or ‘it provides a little bit of protection so if it’s offered you should take it’ sort of thing. All of those things can be true, while at the same time requiring cooperation with the Chinese government that would not necessarily be something we consider in U.S. interests.”
The National People’s Congress, where Yang has advanced proposals about building national technological infrastructure, gains more media coverage abroad than does the CPPCC. But according to Mattis, Yang’s participation in the lower-profile of these two bodies more clearly connects him with the party’s foreign-influence efforts. His research points out that the CPPCC holds a key function in China’s “United Front” political-influence system, as it convenes important figures from across the party, government, the military, and business who would not ordinarily coordinate. The CPPCC is unique because it allows the party to mobilize and coordinate with nonmembers.
Still, Mattis said there’s a way to construct a board such as Intel’s to minimize the risk that sensitive information is leaked: by not exposing such information to Yang and carefully evaluating any advice he offers. But that can only be done if the company is cognizant of the role the CPPCC plays within the Chinese system.
Asked what steps Intel has taken to insulate the committee’s proceedings from the risk posed by Yang’s party ties, a company spokesperson said that “the committee is purely advisory” and repeated that it offers “one set of inputs” to Intel decision-makers.
Though it may be advisory, the participation of such prominent former U.S. officials as Flournoy and Napolitano along with business leaders makes it difficult to believe that the discussions won’t involve sensitive information that Intel would prefer the Chinese defense-industrial establishment not obtain.
If Intel is just using Yang to get a sense for the business climate in China, this gambit may be beneficial. But if Intel has brought him on as a gesture to Beijing, and intends his full participation in the committee’s discussions, that would be a mistake of epic proportions.
Unfortunately, as Intel begins construction of chip plants crucial to shoring up vulnerable U.S. supply chains — for which it deserves recognition — its vague answers suggest the latter. As Gallagher put it, this will be to Intel’s own detriment: “It is time for our technology industry to prioritize the defense of our nation over the last marginal dollar it can scrape out of China before the CCP steals its intellectual property, seizes its assets, and kicks it to the curb.”