Ex-Samsung is accused of stealing to recreate chips in China – 06/13/2023 – Tech

A former Samsung Electronics executive has been arrested and indicted in South Korea for allegedly stealing technology from a major chip maker to build a similar factory in China.

The indictment of the 65-year-old Korean national, who was also vice chairman of rival Korean chip maker SK Hynix, comes as South Korea tries to bolster its defenses against a coordinated campaign by Chinese companies to acquire cutting-edge Korean technologies. .

According to a statement released by Korean prosecutors on Monday (12), the former vice president of Samsung, who has not been named, illegally acquired the information needed to build advanced chip manufacturing facilities.

Its plan, prosecutors said, was to replicate a semiconductor factory just 1.5km from Samsung’s memory chip factory in Xi’an, western China.

“This is not a simple leak of semiconductor technology, but an attempt to copy an entire chip factory,” the Suwon District Prosecutor’s Office said in a statement.

“The scope of the crime and the damages are incomparable to previous individual cases of technology leakage,” the statement added. “If the domestic factory were copied and products of similar quality were mass-produced in China, the losses would be irrecoverable for the semiconductor industry. [coreana].”

The former executive hired about 200 employees from Samsung and SK Hynix for a company he founded in Chengdu, in China’s Sichuan province. They were allegedly tasked with obtaining trade secrets from their former employers, costing Samsung an estimated $230 million, according to the indictment.

“Samsung strictly prohibits strangers from entering its chip factories, because the factory design and equipment layout are closely related to productivity and product quality,” said Lee Dong-hwan, a former state investigator who now works as a patent attorney at the Seoul-based law firm WeFocus.

“But despite its strong security systems, the company cannot prevent technology leaks if a senior executive with good access to extensive, high-quality information intentionally provides it to Chinese competitors,” he added.

Samsung Electronics and SK Hynix, two of the world’s leading memory chip makers, have factories in China. Its technologies are considered by industry experts to be more advanced than those of its main Chinese competitors.

Last year, the US government granted Korean companies a one-year amnesty from export controls aimed at curbing China’s ability to develop next-generation chips. The Financial Times reported last month that Washington had signaled it would extend permission for them to ship chipmaking tools from the US to China for at least another year.

Among the trade secrets the former executive allegedly stole was information related to how to keep impurities out of advanced chip factories and floor plans and dimensions required for various processes in advanced chip manufacturing technologies.

But his plan fell through after he failed to secure a $6.2 billion investment allegedly promised by an unnamed Taiwanese company to a company he founded in Singapore.

Instead, he raised just over $350 million (R$1.7 billion) from Chinese investors to produce experimental products at a factory in Chengdu. According to prosecutors, the construction of the Chengdu factory was also based on technology stolen from Samsung.

Six other people were indicted on Monday as part of that case, including an employee at a Samsung subcontractor and five employees at the executive’s Chinese chip manufacturing company.

As technological competition between the US and China intensifies, Chinese companies are redoubling their efforts to acquire Korean expertise in critical technologies, from semiconductors to electric car batteries, and in sectors such as displays and shipbuilding.

In February, seven people, including former employees of Semes, a subsidiary of Samsung Electronics that specializes in the production of chip cleaning equipment, were sentenced to prison for transferring stolen technology to a Chinese company.

The South Korean government has also established several new investigative bodies to combat leaks, passed legislation toughening punishments and made it easier to report suspected violations.