Ken describes how he injected a virus into a compiler. Not only did his compiler know it was compiling the login function and inject a backdoor, but it also knew when it was compiling itself and injected the backdoor generator into the compiler it was creating. The source code for the compiler thereafter contains no evidence of either virus.

Ken wrote, In demonstrating the possibility of this kind of attack, I picked on the C compiler. I could have picked on any program-handling program such as an assembler, a loader, or even hardware microcode. As the level of program gets lower, these bugs will be harder and harder to detect. A well installed microcode bug will be almost impossible to detect.

Source: The Ken Thompson Hack