Conway made her remarks in response to Kelly's question about whether Trump's campaign headquarters could have been wiretapped by the Obama administration. "What I can say is there are many ways to surveil each other now, unfortunately," she said. "There was an article this week that talked about how you can surveil someone through their phones -- certainly through their television sets, any number of different ways. And microwaves that turn into cameras, et cetera."
She went on to say that this is "just a fact of modern life." But it's not. To clear things up, here's a very brief explainer of how microwave ovens and cameras work and how they cannot turn into each other, unless you are Harry Potter.
A microwave oven's primary components are a magnetron, which converts electric energy to microwave radiation; a waveguide that directs the energy generated; a metal cooking chamber to prevent wave leakage; a turntable, or a fan in some cases; and a control panel that you use to set heat temperatures and times. The magnetron, when powered by electricity, passes microwave radiation through food, which causes molecules to rotate and vibrate. That motion disperses energy in the form of heat, giving you a lovely, warmed-up microwave burrito.
On the other hand, a camera consists of a lens, an image sensor (or photographic film, in older generations) and a processor. Through an opening in the lens, light is reflected and exposed to the sensor or film, which captures and converts detail and color. The processor (in modern digital cameras) turns all that data into a picture, whereas a film developer would do that by washing the film in a darkroom.
Because a microwave oven does not have an image sensor or film with which to capture light, it is incapable of taking pictures, and therefore cannot be "turn(ed) into" a camera. Plus, unless your microwave is connected to the internet (extremely few today are), there is no way for someone to hack it to spy on you.
So why did Conway say what she did? She might have read this MIT report on a microwave camera, though that still requires some specialized equipment you probably won't find in your kitchen. It's more likely she was referring to the Wikileaks Vault 7 documents that described how the CIA was reportedly able to get data from iOS and Android devices, though that doesn't explain the microwave connection. Regardless of the reason for Conway's unfounded claim, rest assured today's microwave ovens can't turn into cameras that spy on you.