Six South Korean nationals were indicted for leaking the country’s national core technology to China. The stolen technologies pertain to the Chemical Mechanical Polishing (CMP) used in manufacturing semiconductor wafers.
The Technology and Design Police Division of the Korean Intellectual Property Office (KIPO) and the Daejeon District Prosecutors’ Office said on Jan. 26 that they arrested three people and charged three others without detention for violating the Industrial Technology Protection Act and the Unfair Competition Prevention Act, Yonhap News Agency reported.
All the individuals on trial are former and current employees of three unnamed South Korean tech firms with critical technologies to the country’s semiconductor value chain.
According to the KIPO, one of the defendants—referred to as “Mr. A”—was suspected of accessing confidential data by connecting to the company’s internal network with a computer and a business cell phone, filming them using his personal mobile device, and leaking them to a Chinese firm. The leaked data reportedly contained many cutting-edge technologies and trade secrets related to semiconductor wafer polishing.
After reportedly being turned down for a promotion to a high-level post at the company in 2018, Mr. A, the alleged primary culprit, agreed to work with a Chinese company on semiconductor wafer polishing in June 2019.
While continuing to work at the South Korean firm, he helped the Chinese firm establish a production base and manage the business remotely through various communication apps.
Mr. A then poached three researchers from other South Korean tech companies to the firm in China and gave them positions as vice president, team leader, and team member in September 2019. He later moved to China in May 2020 and served as the firm’s president.
The annual salary each of them received in the Chinese firm was reportedly 2 to 3 times their prior salaries. Meanwhile, they were also given various forms of preferential treatment in China.
Korean authorities also found leaked confidential business information of two other Korean firms, along with leaked information on where Mr. A had worked.
According to a KIPO official, among the three companies affected, the estimated damage to the firm with the smallest loss due to the leak was more than 100 billion won (about $8 million).
The three unnamed Korean firms affected by the leak are domestically listed companies that manufacture memory semiconductors or semiconductor material parts, such as chemical mechanical polishing fluids and pads. They reportedly have a total market capitalization of 66 trillion won (about $5.3 billion).
Kim Si-hyung, director of KIPO’s Industrial Property Protection Bureau, said the bureau would “further strengthen the role of the Technology Police and take the lead in protecting national core technologies.” Meanwhile, it would “make every effort to provide reemployment opportunities and fundamentally eradicate technology-related crimes.”
China has long been criticized for stealing advanced technologies from countries worldwide, and South Korea, one of the world’s leading semiconductor powerhouses, has been a frequent target of Chinese industrial technology theft.
Frequent Target of IP Theft, Most Related to China
According to The Korea Herald, the country’s National Intelligence Service has detected a total of 99 cases of attempted industrial espionage over the past five years, which would have cost domestic companies about 22 trillion won ($18 billion).
Technologies and trade secrets targeted in the 99 cases from January 2017 to February 2022 involved display devices (19 cases), semiconductors (17), electric and electronic products (17), automobiles (9), shipbuilding (8), information and communications (8), and machinery (8), the report said, citing the intelligence agency.
In recent years, leaks of South Korea’s cutting-edge technologies have frequently appeared in the news, with most related to Chinese intellectual property theft.
On Oct. 27, South Korean prosecutors indicted four current and former Samsung employees for stealing proprietary semiconductor technology from the Korean conglomerate and leaking them to overseas firms.
Two of the employees are former engineers, while the other two were still employed as researchers for Samsung Engineering at the time of reporting.
The stolen technology pertains to the highly valued ultrapure water system used in chip fabrication and other key technical data. Since 2006, Samsung Electronics has reportedly invested more than $21 million annually to develop its ultrapure water systems.
One former employee reportedly acquired an operation manual and a blueprint for an ultrapure water system and other key technology data from two Samsung engineers and leaked the documents to a Chinese semiconductor consulting firm, where he was looking to job hop at the time.
In December last year, four South Korean nationals were charged for allegedly leaking cutting-edge semiconductor technologies to a Chinese company.
According to Korean newspaper JoongAng Ilbo, an unnamed South Korean company illegally obtained the sensitive technology from another South Korean company and then sold it on to a newly established semiconductor company in China.
The stolen technology is a design drawing of a “Hot Zone,” said to be cutting-edge equipment for manufacturing semiconductor chips that the South Korean company invested significant time and capital in creating.
In May last year, South Korean prosecutors indicted two former researchers of SEMES, a Samsung Electronics subsidiary and semiconductor-related supplier, and two other employees of a supplier of SEMES for their alleged involvement in technology theft.
The theft involved selling crucial “wafer cleaning machines” to an undisclosed Chinese entity, according to Suwon District Public Prosecutors’ Office.
The machines are used in the early stage of chipmaking when it is crucial to keep the chip wafers clean. Later stages would require a more sophisticated approach. The equipment uses carbon dioxide in a supercritical fluid state to clean the wafer compared with cleaning with other fluids like ultrapure water.
Experts: ‘More Protection of Intellectual Property Rights Needed’
The Federation of Korean Industries on Oct. 27 released a survey it conducted on 26 industry security experts. About 85 percent of the respondents said that the level of South Korea’s protection of its advanced technology was weaker than that of the United States, while the country’s R&D capabilities are on par with its rival nations.
Based on the experts’ estimates, the report said the average annual damage caused by industrial technology leaks, including overseas leaks, is about $40 billion, equivalent to 2.7 percent of South Korea’s GDP in 2021 and 60.4 percent of the country’s total R&D expenditure in 2020.
Meanwhile, 92.3 percent of the experts believe that China is the country that South Korea should be most wary of regarding leaks, while 7.7 percent believe it is the United States.
South Korea ranked third among 63 countries in “science infrastructure” in the 2022 national competitiveness ranking released in June by Switzerland’s International Institute for Management Development. However, it was ranked 37th for protection of intellectual property rights.
Yu Hwan-ik, chief of the Federation’s industrial research division, said that “Korea is at great risk of losing core technologies and human resources as a highly competitive country in cutting-edge technologies.”
He added that “the society needs to raise awareness as a whole and make institutional improvements.”
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