In a major development, South Korean authorities have arrested two former Samsung Electronics officials for allegedly stealing semiconductor technologies worth over 4.3 trillion won (about $3.2 billion). These technologies were reportedly used to build a copycat chipmaking facility in China.
Arrests and Allegations
The Seoul Metropolitan Police Agency revealed on Tuesday that the arrested individuals had collaborated with Chinese officials to set up the semiconductor plant. One of the suspects, identified only as Choi, is a 66-year-old ex-executive of Samsung Electronics and Hynix Semiconductor (now SK Hynix). He is accused of pilfering vital semiconductor technologies intended for 20-nanometer DRAM memory chips.
In September 2020, Choi founded a joint venture called Chengdu Gaozhen with local Chinese government support. He enlisted former South Korean semiconductor experts, including Oh, a former senior Samsung researcher, to leak Samsung’s technology. Oh, who took on a leading role at Chengdu Gaozhen, played a crucial part in the theft and misuse of Samsung’s proprietary technology. By April 2022, Choi’s team had produced initial products to test the stolen technology’s functionality.
Economic Ramifications
The stolen technology’s estimated value of 4.3 trillion won underscores the economic impact of this breach. The authorities are now probing if additional employees who moved from South Korean companies to Chengdu Gaozhen were involved in further leaks.
A police official remarked, “This incident threatens our economic security. By using stolen domestic technology through a collaboration between a former executive and a Chinese government entity, this theft endangers our national competitiveness.”
Impact on the Global Semiconductor Market
Samsung is a major player in the global memory chip industry, partnering with companies like Nvidia to produce essential components such as VRAM. The theft of its technology could undermine South Korea’s position in the fiercely competitive semiconductor market. The police view Choi’s actions as a serious blow to the country’s competitive edge in the ongoing global “chip war.”
While Choi and his accomplice’s arrest is a significant step toward curbing the Chinese venture, investigations continue to uncover if more individuals are involved in this espionage case.
History of Trade Secret Thefts
This case is not isolated. In May 2023, a former SK Hynix employee was detained at a South Korean airport for allegedly trying to steal semiconductor data. The individual was found with 3,000 pages of documents suspected to be intended for Huawei, although she denied the charges.
Similarly, Taiwan has frequently accused China of intellectual property theft, especially in semiconductor technology. Reports suggest that Chinese firms have been poaching Taiwanese engineers to advance their own chip development. These actions have heightened China’s quest to build a competitive semiconductor industry.
China’s Push for Semiconductor Self-Sufficiency
China’s ambition to develop its own chipmaking capabilities is driven by its heavy reliance on Western technology. U.S. sanctions and export controls have hindered China’s progress, pushing it to seek alternative technology sources.
Despite these hurdles, China is determined to boost its domestic chip production, leveraging its significant rare earth mineral reserves. As geopolitical tensions rise, Chinese officials may overlook these intellectual property thefts in their quest to gain a technological edge in the global semiconductor race.
