Ex-Samsung Executive Accused of Stealing Trade Secrets

Facts

• South Korean prosecutors have indicted a former Samsung executive for allegedly stealing computer chip technology to build a rival factory one mile away from a Samsung plant in the city of Xian, China. The accused executive is also a former vice president at SK Hynix, the world's second-largest chip manufacturer after Samsung.¹
• The unnamed 65-year-old executive is accused of stealing factory blueprints and clean room designs from 2018 and 2019 in his unsuccessful attempt to start a copycat factory. The stolen technology is worth $233M, according to prosecutors.²
• The accused is alleged to have lured approximately 200 chip experts from Samsung and SK Hynix with promises of better pay before the factory scheme fell through due to funding from Taiwanese investors being withdrawn. Despite this, the accused was still allegedly able to produce a prototype chip based on the stolen technology.³
• Prosecutors have called the scope of the leak 'incomparable.' South Korea faces pressure from China's emergent semiconductor industry and from the US, who granted the country a temporary exemption from semiconductor export controls that would have forbidden them from having chipmaking equipment in the PRC.⁴
• Six other individuals have been indicted in connection with this crime. 40% of South Korea's semiconductors are exported to China, with Pres. Yoon Suk Yeol describes competition in the industry as an 'all-out war.'¹
• Analysts estimate that there is only a 1-2 year technological gap between Chinese and South Korean firms. Companies and prosecutors have been cracking down on industrial espionage, with 77 individuals arrested last Sunday in connection with 35 cases of corporate spying.¹

Sources: ¹Reuters, ²Associated Press, ³Korea Herald and ⁴FT.

Narratives

• Anti-China narrative, as provided by FT. If South Korea wants to get tough on leaks to China, it needs to stop building factories in a country notorious for its industrial espionage programs. The South's relentless poaching of technology and talent will only escalate if it continues to expand manufacturing in the Chinese market. Seoul is at risk of losing its technological advantage to the PRC if it does not join the West in tightening its semiconductor trade.
• Pro-China narrative, as provided by Global Times. Instead of pointing the finger at China, South Korea would be wise to take a hard look at America's punitive export controls that have forced Chinese firms to target South Korean talent. If America lessened its aggressive and ill-advised export control policy, competition would be much less cutthroat. Seoul cannot afford to begin antagonizing its most important trading partner.