South Korea Prosecuting Samsung Ex Executive for Trade Secret Theft

On June 12, 2023, South Korean prosecutors indicted a former Samsung executive on trade secret theft suspicions after an unsuccessful attempt to replicate Samsung’s semiconductor factory in China.

• A former executive at Samsung and SK Hynix, managed to obtain advanced chipmaking facilities information and tried to build a chip facility that ultimately failed due to a lack funds..
• The trial date is yet to be confirmed.

On June 12, 2023, South Korean prosecutors indicted a former Samsung executive on trade secret theft suspicions after a failed attempt to establish a replica of Samsung’s semiconductor factory in China.

The unnamed 65-year-old Korean national was an executive at Samsung Electronics and a Vice President at SK Hynix, a South Korean memory chips and flash memory chips supplier, for a combined 28 years. He managed to get his hands on advanced chipmaking facilities information. The Suwon District Prosecutor’s Office clarified the nature of the crime. They stated, “This is not a simple semiconductor tech leak but an attempt to copy a whole chip plant.”

The accused allegedly has a record of unethical work practices. In fact, he poached about 200 employees from Samsung and SK Hynix for a company he established in Chengdu in China’s Sichuan province. They were allegedly tasked with acquiring trade secrets from their former employers.

The individual planned for the copycat semiconductor facility to be 1.5 km away from Samsung’s memory chip plant in Xi’an in Western China based on information stolen between 2018 and 2019. But his plans came crashing down as he failed to secure a $6.2 billion investment that an unnamed Taiwanese company had allegedly promised for a Singaporean company of his.

The information actually included methods to keep impurities out of advanced chip plants and the floor plans and dimensions necessary for several advanced chipmaking technology processes. As a result, the prosecutors estimate $233 million in losses for Samsung.

This indictment comes at a crucial time. The tension between the two Asian powerhouses as well as the one between the U.S. and China are intensifying. South Korea has indeed recently vowed to support its semiconductor manufacturing sector, and the competition is heating up as China was catching up to South Korea despite entering the game late.

The South Korean prosecutors have investigated the involvement of former unnamed Samsung executive in trade secret theft. They have also looked into his attempt to build a functioning copy of the computer chip plant in China. While the trial date is unknown still, the prosecution has arrested six other individuals for their suspected participation.

“The scope of the crime and damage are incomparable to previous individual tech leak cases,” said the prosecutors in their statement after the fact. “If the domestic plant were copied and similar quality of products were mass-produced in China, it would have caused irrecoverable losses to the [Korean] semiconductor industry.” They stressed the fact that had he been successful, the situation would irreparably damage the South Korean chip sector.

Following this incident, South Korea will probably follow the US, the Netherlands and Japan’s leads in clamping down on sales of chipmaking equipment to China.

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