South Korean prosecutors have indicted and detained a 66-year-old expert on charges of stealing millions of dollars in trade secrets to build a replica factory in China. He was a senior executive at Samsung Electronics, the world’s leading memory chip maker. He even won the employee of the year award three times. After 18 years there, he joined Hynix Semiconductor (later renamed SK Hynix) – Samsung’s domestic rival – in 2001. There, he was instrumental in improving SK Hynix’s chip productivity.
When he was named CEO of a Chinese-backed company in 2020, Seoul’s spy agency raised the alarm about economic espionage and technology theft. Prosecutors said he recruited about 200 former Samsung and SK engineers and accused him of stealing key factory specifications and cleanroom designs.
Although the suspect failed to set up a Samsung “copycat” production line in Xi’an, the source revealed that millions of data sets were also stolen.
The incident is a wake-up call for South Korea’s big tech companies and the country itself, said a former Samsung executive who was approached to work for a Chinese semiconductor company. The biggest concern, he said, is that knowledge and skilled personnel are much harder to control than products. As semiconductor and battery technology become increasingly difficult to acquire through acquisitions, rivals tend to recruit engineers who are good at those fields.
Home to the world’s largest battery and memory chip makers, including LG Energy Solutions and Samsung SDI, South Korea needs to better protect its intellectual property. Data from the National Intelligence Service (NIS) shows that 93 suspected cases of industrial espionage were detected between 2018 and 2022. Semiconductors, displays and batteries were the main targets.
The economic impact of intellectual property theft is one of the biggest concerns of South Korean officials. The Federation of Korean Industries (FKI) estimates that the annual cost of intellectual property theft is between 56 trillion won and 60 trillion won.
Officials at the Korea Intellectual Property Office (KIPO) said they will expand the scope of technology theft investigations and increase the number of investigators. KIPO will cooperate with domestic law enforcement agencies, in addition to the NIS and the US Department of Homeland Security. In addition to doubling fines, whistleblowers will also receive increased rewards.
According to prosecutors, only 47 people in 445 commercial espionage cases were arrested from 2019 to 2022.
While job-hopping is a personal decision, chips, displays and batteries have become geopolitical issues, a South Korean lawmaker said. The National Assembly’s Strategic Industry Committee will ask the NIS, KIPO and other law enforcement agencies to seek increased prison terms for economic espionage cases.
(According to Korea Times)
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