South Korean Chip Executive Denies Stolen Samsung Data For China Factory

A former South Korean chip executive imprisoned over industrial espionage charges rejected allegations on Monday he had sought to build a copycat chip factory in China with sensitive information developed by Samsung Electronics. Prosecutors said the 65-year-old, who previously worked for SK Hynix, stole data to help his Singapore-based firm, Jin Semiconductor, set up a plant 1.5 km from Samsung’s factory in Xian, China. The theft amounted to “a serious crime that jeopardized national economic security,” they added.

Known as Choi Jinseog, the former executive was charged with illegally obtaining the blueprints and clean-room designs of Samsung’s memory chip factory. Those documents are considered core national technology and protected by law. Their theft was a serious breach that caused more than $200 million in damages to the world’s leading chipmaker, prosecutors in the southwestern city of Gwangju said. Six other people were also charged with helping Choi obtain the stolen technology, smuggled out of the country via the Singaporean company.

The charges were a blow to Seoul, whose top chipmakers account for about one-fifth of its exports, and the industry is essential for the country’s economy and national security. The country’s leading memory chip maker, Samsung Electronics, and SK Hynix, the No. 2 producer, have invested heavily in factories in China, where competition is stiff.

The alleged theft could have caused severe damage to the domestic semiconductor industry as well, prosecutors said, warning it could shake the foundation of chip production when competition is intensifying globally. The case came at a time when President Yoon Suk Yeol described the battle for global market share in the chip industry as a full-scale “total war.”

Choi elaborated on his defense plan in a handwritten letter to Reuters, sent via his adviser, who visited him on Thursday. He said he planned to set up a research and development chip line, not replicate Samsung’s mass-production facilities. He also argued that he had not wanted to locate the facility in Xian because he had looked at several cities, including Qingdao.

He also denied that he had been trying to sell the smuggled technology, which he said was “non-sensitive” and accessible to those in the industry. The letter was his first comment to the media since his detention on May 25.

His lawyers also said he would dispute the accusations and called for a fair trial, though a date was not set. They have yet to receive a detailed indictment from the prosecution to determine their defense.

A former employee of Semes, a subsidiary of Samsung Electronics that makes semiconductor cleaning equipment, was sentenced to four years in prison for leaking crucial information on the equipment to Chinese companies and a local chip research center. The company has said it will strengthen controls to prevent leaks of confidential information. It has also started an internal investigation into the incident. The country’s chipmakers are under growing pressure to produce more chips as global demand is strong, and they are struggling with a fierce rivalry between the United States and China that has exacerbated geopolitical tensions and trade disputes.

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