carol: up next we will hear from the ceo of akhan semiconductor.lus, eric will give us a play-by-play of the sting operation in las vegas last month. carol: it's fascinating. this is bloomberg: businessweek. ♪ carol: welcome back to bloomberg: businessweek. jason kelly. join us on the radio from two-5 p.m. eastern time. you can get our podcast on icloud, -- on soundcloud, itunes and on her website. -- our website. we will stay on this international cover story about huawei. bloombergs erik schatzker followed an fbi investigation into their dealings with the chicago area startup. ceo expense to eric why he thinks they were going after his technology in what he expects to happen next. >> the worst case scenario, we have been publicly discussing some of the work we are doing on the defense and aerospace side. it could potentially put them in the right direction in terms of what to optimize. that is the worst case from a weaponry standpoint. the best case on the context of simplyte espionage is wanting to differentiate from against the same sites, appl

akhan is looking to file civil litigation concurrent to it. main purpose is making sure the fbi gets their investigation right. there is in part a national security portion of it and a corporate espionage, a market couldportion that akhan seek as a remedy in terms of damages. carol: now we get to some of my favorite parts about the story. we talked to erik about the lead up to the fbi sting operation. it happened at the consumer electronics show in las vegas. erik: the fbi, in order to keep the investigation running, the fbi did not want them to break off contact with huawei. at a certain point, they asked them to reinitiate contact with huawei so that the fbi could listen into a conference call, affectively bug the conference call, and have these akhan executives ask questions. what happened to the sample, where to go? and the course of this call, they learned the sample had actually gone to china. that is a very important point to make because diamond coating with its applicability to military applications is on a restricted list. it is not

we, as an akhan is trying to lead them down a path.the same time, huawei is trying to play akhan to learn more about the process. so they set up this meeting at the consumer electronics show, where i happened to be. they wired up the chief operation officer with covert surveillance devices. initially, they were going to have this meeting in a room at the consumer electronics show. an hour before it happened, they -- the huawei representatives suddenly and suspiciously change the location of the meeting to the food court at the venetian casino. that is where the sting went down. carol: and you saw it? >> i watch the two groups meet the akhan executives. i watched them move towards the food court, they'll walk into a fast casual restaurant called "prime burger." that is where the sting went down, trying to look inconspicuous by a gelato stand. jason: where does it stand? what happened? >> the fbi, thanks to the surveillance agreement, recorded both audio and video of this interaction. there were discussions they are -- there again about

we sat down with the ceo of akhan and talked about the opening incident that raised suspicion.t you to take a listen to what he had to say. >> in sending some of our samples for nondestructive sampling as we do with the other potential customers, we received back on the second round of sampling, a sample had been damaged. a large portion of the glass was missing and broken, which was very concerning for us. after seeing this portion of the glass that was missing, we realized this is not really something that could be done in shipping, but more so attempt at theft of intellectual property. emily: by the way, this glass is supposedly very innovative. it has a layer of artificial diamond coating on it. give us the play-by-play in terms of what happens next after they get the broken glass back. max: they got the broken glass and they thought that was weird. we should say, we don't know how good this glass is but what is interesting to me about this story is what happens next, which is one of the executives from this company, akhan, walked into a field office in chicago, reported th

and they violated not only that, but in a smaller sense, the covenant with akhan, bad faith negotiationso an exquisite -- explicit legal agreement. >> at this point, it is difficult to know -- and you may never know exactly what they wanted to know. what might they have wanted to know about your technology? the least, benchmarking the technology. we are all well reputed in the market from an analyst and researchers. in terms of the parameters, strength performance, the quality of the deposition material, it is a good representation of what a leading diamond material should look like. beyond that, perhaps how we came about construing this matrix, the techniques we use to implement this, and perhaps taking it a step further, some of the work we are doing on the defensive side, seeing its applicability's in that realm. that was a adam khan, ceo of a consummate conductors. coming up, why cold temperatures and freezing door handles are becoming a hot issue for tesla owners. this is bloomberg. ♪ shery: time for the bloomberg business flash. a look at some of the biggest stories in the news rig

erik schatzker followed an fbi investigation into a chicago akhan semiconductor bank. .ll us what you learned. >> the fascinating aspect of this report i have assembled was the opportunity to witness a sting operation unfold at the venetian casino in las vegas. the fbi took a sincere interest in the allegations that huawei was trying to steal this y's technology. this company has come close to perfecting a method for laying down a diamond on glass and it would transform the smartphone industry. this could replace gorilla glass and this could usher in a generation of faster, smaller, thinner, stronger consumer electronics. that is what is at stake. when this company discovered that huawei was trying to hack the trade secrets that enable reportednology, they it to the fbi and the fed started this investigation. it being this about after more than just smartphone technology? there are some people who do wonder are the chinese trying to steal trade secrets, is it about commercial espionage or something more nefarious. it is a valid question and i would like you to hear the c