Ex-Samsung exec arrested over alleged Chinese copycat fab

Ex-Samsung exec arrested over alleged Chinese copycat fab

Business news |
By Peter Clarke

A senior executive formerly with Samsung Electronics has been arrested over the alleged theft of trade secrets intended to be used to build a copycat wafer fab in China.

The unnamed 65-year-old executive, who previously worked for SK Hynix, was charged with breaking theft and unfair competition laws, sources report the Suwon District Prosecutors Office, as saying. Reportedly he stole details to allow the building a complete copy of Samsung’s wafer fab in Xian.

Samsung’s wafer fab in Xian, western China, is one of the most heavily invested wafer fabs in China and Samsung used it to produce about 40 percent of its NAND flash memory output in 2021.

The executive is accused of stealing confidential data including the basic engineering data and manufacturing process layout and design drawings from August 2018 to 2019. These trade secrets are essential for the production of DRAM and NAND flash memories with critical dimensions below 30 nanometers, the report said.

“This is not a simple semiconductor tech leak but an attempt to copy a whole chip plant,” the Suwon District Prosecutors’ Office reportedly said in a statement. “If the domestic plant were copied and similar quality of products were mass-produced in China, it would have caused irrecoverable losses to the [Korean] semiconductor industry,” the statement added.

The authorities have also indicted six other people, one an employee of a Samsung Electronics subcontractor and five employees of a Chinese chipmaker established by the former executive.

Reportedly the former executive attempted to build a copycat wafer fab just 1.5 kilometers away from Samsung’s Xian wafer fab but the plan was thwarted when a Taiwanese investor failed to provide 8 trillion won (about US$6.2 billion) for the project.

Instead the former executive used 460 billion won (about US$350 million) from Chinese investors to produce trial products using Samsung technology at a wafer fab in Chengdu in 2022, the reports state referencing the Suwon Prosecutor.

The wafer fab in Chengdu hired about 200 engineers from Samsung and SK Hynix and the unnamed executive allegedly instructed employees to obtain Samsung data. The reports say that Samsung has estimated it suffered damages due to the theft of trade secrets of at least 300 billion won (about US$230 million).

Related links and articles:

SK Hynix capitalizes on investment in HBM

NAND flash makers under pressure in falling market

YMTC gets $7 billion cash injection

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