A former Samsung Electronics executive in South Korea has been charged with abducting company equipment on Monday, a prosecutor said, for sharing about a technology of the company with a Chinese chip factory that copies others’ technology, and threatening national economic security.
South Korea is a chipmaking hub and has been pressured under the geopolitical and economic tension between the US and China. President Yoon Suk Yeol expressed that the chip industry competition is an “all-out war”.
In a statement, the Suwon District Prosecutor’s Office said the suspect had previously served as vice president at SK Hynix and is charged for illegally laying hands on Samsung data and administering it to establish a factory, located 1.5 km (1 mile) away from the Samsung chip manufacturing factory in Xian, China, to compete with Samsung. The stealing of Samsung data has brought about at least 300 billion won ($233 million) worth of loss on Samsung Electronics, a prosecutor said.
“It’s a grave crime that could deal a heavy blow to our economic security by shaking the foundation of the domestic chip industry at a time of intensifying competition in chip manufacturing,” the prosecutors’ office said. The defendant who was arrested last month has rejected all charges made against him, a prosecutor said.
A prosecutor also said the accused, who has not been identified by the officials, worked for 28 years at the two companies of South Korean chipmakers.
The court where the allegations have been filed has not yet given a confirmed date for the trial to begin.
A prosecutor said the effort to set up a rival plant using Samsung data between 2018 and 2019 failed because of funding issues.
Six other people have been accused of involvement, including an inquiry on a company employee allegedly accused of exposing the infrastructural plans of Samsung’s semiconductor factory.
China’s strength in chip making, to compete with South Korea
The allegations of illegally acquiring Samsung’s data come in the midst when South Korea pledges to bolster its chip industry.
The world’s two major memory chip manufacturers, Samsung and SK Hynix have devoted billions of dollars to build chip factories in China.
According to trade ministry data, Samsung and SK Hynix rely on technology and equipment from the United States, South Korea exports about 40% of its chips to China.
Though China did not have much experience in the chip-making industry earlier, lately its companies have grown to the level of the firms in South Korea. As per a Seoul-based analyst, there is only two years or less gap between NAND Flash chips produced by YMTC in China and those on the top of the industry such as Samsung and SK Hynix.
The analyst said that South Korean companies develop their chips in South Korea, then manufacture them in China’s factories after a year, and partly avoid exposing its latest technology.
For the past few months, South Korea has been taking measures to suppress its corporate spying. The officials said on Sunday, they had arrested 77 people who were accused of industrial espionage in 35 cases in an inspection across the country for four months.
In a statement, a national police official said, “We will sternly deal with any leakage of our technology abroad and strongly respond to illegal leak of domestic companies’ core technologies in semiconductor, automobile, and shipbuilding sectors among others.”
