November 23, 2024

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Prosecutor Park Jin-sung, who is in charge of industrial and defense technology crime at the Suwon District Prosecutors' Office, speaks at a press conference at the prosecutors' office in Suwon, Gyeonggi Province on Monday. (Yonhap)

A former executive of Samsung Electronics has been taken into custody for leaking the tech giant’s confidential business information to build a copycat semiconductor manufacturing plant in China, a local prosecutor’s office said Monday.

In a press conference, the Suwon District Prosecutors’ Office revealed it has arrested the 65-year-old former executive of Samsung for violating the Prevention of Divulgence and Protection of Industrial Technology Act and the Unfair Competition and Trade Secret Protection Act. Six others employees who worked for the executive were also indicted without detention.

According to the prosecution, the former executive, whose name has been withheld, worked in Samsung's chip division for 18 years, and also served as a vice president at SK hynix, the world's second-largest memory chip maker after Samsung.

The executive is accused of inappropriately acquiring confidential business information and misusing the data from August 2018 to 2019.

The prosecution suspects the executive attempted to build a chip plant in China using confidential information from Samsung, including basic engineering data, or BED, for optimizing the production environment to eliminate impurities, and also eight key floor plans for positioning the manufacturing equipment.

The accused secured Samsung’s chip plant layout and data from the tech giant’s contract firm and then passed on the data to a construction firm to build a copycat manufacturing plant just 1.5 kilometers away from Samsung’s Xian plant, according to the prosecution.

The BED and floor plans involving the production of 30-nano and smaller DRAM chips and Nano flash memory, are considered national strategic technologies and are protected by the law in South Korea.

The prosecution said the former executive had won two investment contracts to receive 460 billion won from China’s Chengdu City and 8 trillion won from a Taiwanese electronic appliances company for the envisioned chip production plant.

While the construction plan of the copycat factory fell through after the Taiwanese company withdrew its contract to invest the 8 trillion won, the executive still succeeded in producing prototype chips using Samsung's technology, with the funding from Chengdu City, the prosecution explained.

The former executive also hired some 200 chip experts, including those with work experience in Samsung and SK, attracting them with high salaries.

The confidential data is thought to be worth 300 billion won at minimum and possibly as much as trillions of won, as it is the result of decades of simulation, research and development efforts at Samsung.

“We are taking stern legal measures against (the executive's) attempt to copy Samsung's semiconductor manufacturing plant entirely to build another one," the prosecution said.

"It is a serious criminal act that can damage the foundation of Korea's chip industry amid fierce competition in semiconductor production," it said.

By Jo He-rim (herim@heraldcorp.com)