Former Samsung Executive Arrested for Stealing Trade Secrets to Build Chip Plant in China

Quincy Jon, Tech Times 12 June 2023, 11:06 am

An ex-senior official of Samsung Electronics Co. was detained and charged on Monday for allegedly stealing trade secrets to build a chip facility in China.

According to the Suwon District Prosecutors Office, the CEO, 65, has been accused of breaking the laws protecting industrial technology and preventing unfair competition, Yonhap reported. His name was undisclosed.

The allegations state that between August 2018 and 2019, the former executive illegally obtained Samsung's private information, including primary engineering data (BED) for chip plants and process layout and design drawings. He allegedly intended to use the stolen data to construct a replica of Samsung's semiconductor facility in China.

One employee of a Samsung Electronics subcontractor and five workers of a Chinese chipmaker founded by the former boss have also been indicted by the prosecution. These individuals were accused of cooperating in the technology leak but were not imprisoned.

While process layout offers critical information regarding the floor design and size of a chip plant's fundamental operations for semiconductor production, BED technology is essential in ensuring the absence of contaminants in semiconductor manufacturing facilities. These trade secrets are considered critical core technologies for producing DRAM and NAND flash devices smaller than 30 nanometers.

According to reports, the defendant intended to build the chip factory in Xi'an, China, less than a mile from an existing Samsung facility. He is accused of hiring 200 workers from Samsung and SK Hynix and giving them orders to gather and use trade secrets under his direction, according to Engadget.

The defendant first collaborated on the scheme with an unnamed Taiwanese electronics manufacturing business contributing $6.2 billion. The collaboration, however, failed. But the defendant raised around $358 million from Chinese investors, which he used to build prototypes at a factory in Chengdu. According to the prosecution, the factory was also built using knowledge stolen from Samsung.

Samsung Loses Over $200 Million

The indictment coincides with rising hostilities between the US and China over the semiconductor market.

The accused ex-Samsung executive has developed two chip factories in China and Singapore and has over 25 years of expertise in the semiconductor sector. Over 200 semiconductor specialists from Samsung and SK Hynix in South Korea were recruited by him during his tenure, per TechCrunch. According to estimates from the prosecution, Samsung might suffer losses of at least $233 million (300 billion won) due to the stolen data.

The accused person attempted to reproduce an entire semiconductor plant. Therefore, the prosecution highlighted that this case involves more than just a simple leak of semiconductor technology.

According to the prosecutor's office, the case is "a serious crime" that could severely impact the "foundation of the domestic semiconductor industry" during a period of intense competition in the chip production industry.