A former Samsung Electronics executive has been indicted by South Korean prosecutors for allegedly stealing company technology and transferring it to a Chinese chip factory.
The prosecutors claim that the defendant, who also worked as a vice president at SK Hynix, a South Korean chipmaker, illegally obtained Samsung data to build a copycat chip plant in Xian, China, only 1.5km away from a Samsung facilit. The prosecutors estimate that the data theft caused at least 300 billion won ($312 million CAD) worth of losses for Samsung.
The defendant, who was arrested last month, denies the allegation. Six other people have also been indicted for their suspected involvement in the case, including an inspection company employee who allegedly leaked the architectural plan of Samsung’s semiconductor factory.
“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 reportedly attempted to build a new plant using the stolen Samsung data between 2018 and 2019, but the plan failed due to funding issues.
The indictment comes at a time when South Korea is facing increasing pressure from the geopolitical and economic rivalry between the United States and China over the chip industry. The chip sector is vital for South Korea’s economy, as it accounts for a considerable percentage of its exports. Samsung and SK Hynix are the world’s top two makers of memory chips, which are used in smartphones, computers, and other devices. However, China has been rapidly catching up with its own chipmakers, such as YMTC, which produces NAND Flash chips that compete with those made by Samsung and SK Hynix.
Analysts estimate that the technology gap between the Chinese and South Korean firms is only two years or less. China is also a major market for South Korean chips, as about 40 percent of South Korea’s chip exports go to China.
South Korea has vowed to step up its support for its chip sector and protect its core technologies from being leaked abroad. President Yoon Suk Yeol even described the chip industry competition as an “all-out war.”
“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,” a national police official said in a statement.
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