[Peace&Chips] K-Semiconductor Technology Going Abroad Again? ... Struggling with Continuous Leaks

Former Samsung Electronics Manager Accused of DRAM Technology Leak
Estimated Damage in the 2 Trillion Won Range, Equivalent to Q3 Operating Profit

Concerns Over Narrowing DRAM Technology Gap with China
Calls for Improvement in Domestic Lenient Sentencing Standards

Last week, while attention was focused on the semiconductor business achievements that Samsung Electronics and SK Hynix brought back from the Netherlands, news emerged that added to the semiconductor industry's concerns. A group including Mr. Kim, a former Samsung Electronics manager, was arrested on charges of transferring 18-nanometer (nm; 1 nm = one billionth of a meter) class DRAM process technology and other secrets to the Chinese semiconductor company 'Changxin Memory Technologies (CXMT)'.

The semiconductor industry estimates that Samsung Electronics suffered damages worth approximately 2.3 trillion won due to this technology leak. This amount is comparable to Samsung Electronics' operating profit of 2.43 trillion won in the third quarter. It means that the third-quarter achievements, earned through the efforts of over 120,000 Samsung Electronics employees amid difficult economic conditions, were lost due to the misconduct of a few individuals.

The problem is that this leak may not only cause temporary damage but also affect the narrowing of the technological gap between South Korea and China. Memory semiconductors are divided into DRAM and NAND flash, and since DRAM technology has been more advanced than NAND, the technological gap with China had been over five years. However, recently, Chinese companies have been rapidly growing with the support of their government, reducing this gap.

In fact, CXMT, a Chinese DRAM company established in 2016, has achieved several business milestones in a short time. Last month, it introduced a low-power double data rate (LPDDR) 5 DRAM product for mobile use. Comparing this to Samsung Electronics, which launched the same specification LPDDR5 DRAM in 2019, the technological gap has been reduced to less than four years.

There are also factors that raise concerns about further personnel and technology leaks in the future. According to the prosecution's disclosure of Mr. Kim's activities, he proposed job changes to about 20 domestic technical colleagues, including Samsung Electronics employees with over 10 years of experience. He himself reportedly received an annual salary exceeding 1 billion won and hundreds of billions of won in bribes. Although news of China poaching domestic semiconductor experts is not new, seeing the amounts offered makes the issue feel even more serious.

Image of the low-power double data rate (LPDDR) 5 product released last month by Chinese semiconductor company Changxin Memory Technologies (CXMT) / [Image source=Captured from CXMT website]

The semiconductor industry believes that China's actions are likely to intensify in the future. This is because China is engaged in a hegemony competition with the United States in the semiconductor field, and with the recent strengthening of U.S. sanctions, China's desire for semiconductor technological independence has grown stronger. The Korea Institute for International Economic Policy's report in September, which described the U.S.-China semiconductor hegemony war as "a war that will not end," was likely based on this assessment.

Within and outside the industry, there is growing public opinion that measures must be found to prevent damage, as this scenario is quite predictable. Currently, the government designates semiconductors as a national core technology and protects them by law, but there are criticisms that the sentencing levels are low compared to competing countries, and that these should be strengthened. As semiconductors have become increasingly important as national security and economic assets, related laws should reflect this.

In fact, Mr. Choi, a former Samsung Electronics executive who was caught last June for attempting to replicate Samsung Electronics' semiconductor factory in China, was released on bail last month after paying a deposit of 50 million won, sparking controversy. Since Mr. Choi is accused not only of causing trillion-won scale damages through technology leaks but also of recruiting domestic engineers to China, his release on bail led to criticism that the punishment was too lenient.

The fact that a similar semiconductor technology leak crime surfaced again just a month after this controversy carries significant implications for us. We hope that solutions to improve related issues will be quickly prepared in the new year.

Editor's NoteSemiconductors, often called the rice of modern industry. Although it's a term we hear every day, it's hard to explain. Peace & Chips will make the difficult concepts and overall flow of the semiconductor industry easy to digest. Just put your spoon down and enjoy.