A former Samsung researcher was arrested and a South Korean executive linked to SK Hynix was convicted for crimes related to technology espionage in China.
South Korean authorities have charged a 49-year-old former head researcher, known only as “A,” from Samsung Display (SDC) for violations under the “Unfair Competition Prevention Act.” The charge sheet alleges that between 2018 and May 2020, “A” sought to leak critical SDC technologies associated with OLED display ELA (Excimer Laser Annealing) equipment and reverse optical systems, in addition to OCR inkjet technologies, to companies in China.
The reverse optical system of ELA equipment ensures the calibrated intensity and safety of lasers applied to OLED display circuits. OCR inkjet technology is essential for bonding OLED display panels with glass covers. These technologies are pivotal to Samsung Display’s OLED manufacturing operations, with a cumulative worth estimated at a minimum of 340 billion Korean Won (roughly $250 million).
“A,” a seasoned expert in OLED technologies, had a decade-long tenure at Samsung Display. Following his exit, he established a domestic display company, “B,” and a corresponding entity, “C,” in China. He not only transferred Samsung’s OLED technologies to Company B but also sought to monetize them further through his Chinese venture, Company C. The operation implicated other employees and acquaintances from his Samsung days.
Five associates indicted alongside “A” in August 2020 include three former SDC researchers who received 1–2 years of prison sentence, while two others were given suspended sentences. “A,” having initially fled to China, returned voluntarily to South Korea this year for judicial proceedings.
In a parallel development, the Seoul Central District Court convicted a 59-year-old deputy CEO, referred to as “D,” from a firm collaborating with SK Hynix. Last month, the executive received a one-year prison sentence.
The company in question faced penalties amounting to 400 million Korean Won (about $300,000), while seven other implicated employees were handed down suspended sentences or fines. They were charged in January 2021 under both the “Industrial Technology Protection Act” and the “Unfair Competition Prevention Act.”
The group, led by “D,” is accused of divulging vital semiconductor technologies, including HKMG (High-K Metal Gate) manufacturing techniques and proprietary cleaning formulas, to competing firms in China as early as 2018.
HKMG technology is a revolutionary process designed to mitigate current leakage and enhance electrostatic capabilities, offering both speed and power efficiency improvements in DRAM semiconductors.
The defendants were also implicated in covertly obtaining top-edge technologies and blueprints for supercritical cleaning equipment from former employees of Samsung Electronics and its subsidiary, Semes. These technologies, which employ carbon dioxide to minimize substrate damage during cleaning, are considered national core technologies by South Korea’s Ministry of Trade, Industry and Energy.
Heightened Measures Against Tech Espionage, 90 Percent of Leaks Go to China
Recent statistics from South Korea’s Ministry of Justice reveal a concerning trend. From 2017 to 2022, South Korea has seen 117 instances of its industrial technology being leaked abroad, with 36 of these involving crucial national technologies. Strikingly, 92.3 percent of these leaks have been traced back to China.The lax punishment for tech espionage has drawn considerable ire from both public and industrial circles. According to the Federation of Korean Industries, a staggering 60.6 percent of first-instance criminal public trials in 2021, related to the violation of the Industrial Technology Protection Law, ended in acquittal. Additionally, 27.2 percent of cases resulted in suspended sentences.
Addressing this loophole, South Korea’s Ministry of Trade, Industry, and Energy announced plans in late August to bolster existing punishment measures. “The current leniency in penalties stems from discrepancies in sentencing standards and vague criteria for defining criminal offenses. We aim to revise and strengthen these frameworks,” said a representative from the Ministry.
To this end, the Ministry has submitted a proposal to the Sentencing Commission to enact separate and more stringent sentencing guidelines specifically tailored for technology leakage crimes. After careful scrutiny, the Commission is expected to arrive at a decision by January of the coming year, with a final vote anticipated in March.
In a move that aims to close legal loopholes, the Ministry of Trade, Industry, and Energy also revealed plans to extend restrictions on key avenues that have previously eluded legislative limits. This includes targeting acquisitions and mergers facilitated through foreign private equity funds, which have served as conduits for technology outflow.
These measures come in a concerted effort to safeguard South Korea’s technological edge to thwart the unscrupulous transfer of its intellectual assets to foreign competitors, especially those in China.
