Semiconductor Technology Leak 'Light Punishment' Law Revision 'Wasting Time' Must End (Comprehensive)

Even When Advanced Technology Is Illegally Transferred Abroad,
Maximum Sentence Limited to Half

Industry Fears Political Issues May Be Deprioritized
"Protecting Skilled Personnel Is Key to Securing High-Level Technology"

[Asia Economy Reporter Moon Chaeseok]

#A, the CEO of a partner company who stole advanced semiconductor technology from Samsung Electronics' subsidiary Semes to develop equipment for export to China, was sentenced to 1 year and 6 months in prison in the first trial at the Seoul Central District Court on the 18th of last month. This was because he illegally acquired and utilized advanced technology managed as trade secrets by the victim company, causing a significant risk of financial damage. Despite violating the principle strictly prohibited by the relevant law, the "Act on the Prevention and Protection of Industrial Technology Leakage (Industrial Technology Protection Act)," A received a punishment amounting to about half of the maximum sentence prescribed by law in the first trial.

#B, an employee of Samsung Electronics' DS (semiconductor) division found in the foundry sector, was caught earlier this year for mass viewing of confidential semiconductor-related materials uploaded on the company's secure server. It was revealed in March. The National Intelligence Service judged that an investigation was necessary regarding the leakage of national core technology and reportedly forwarded the case to the prosecution in April. This is also a case of "illegal acquisition and utilization" prohibited by the Industrial Technology Protection Act.

There are criticisms that insiders of the company, subsidiaries, or partner company affiliates brazenly sold advanced technologies such as semiconductors to foreign countries but only received "lenient" punishments. At the center of this issue lies the Industrial Technology Protection Act, whose revision discussions have been sluggish. It is expected to be a topic of debate in this year's National Assembly audit as well. Even related institutions in the National Assembly have stepped forward to firmly state the need for "consideration of law revision."

The industry demands the necessity of strengthening punishments through legal amendments but insists that the precedent of sluggish discussions should not be repeated. This time, they are raising their voices for the political sector to swiftly push forward the revision work. It is pointed out that making only future workforce development plans while neglecting the management of existing personnel is akin to "locking the stable after the horse is lost."

According to the National Assembly and government on the 5th, there is a growing opinion in the political circle that the revision of the Industrial Technology Protection Act should be publicized at the first National Assembly audit after the inauguration of the Yoon Suk-yeol administration in October. On the 2nd, the National Assembly Legislative Research Office stated in its "2022 National Assembly Audit Issue Analysis" report that "legislation to protect technology is necessary to prevent the leakage of core semiconductor technology and excellent human resources overseas," and "consideration can be given to revising the Industrial Technology Protection Act and the 'Act on the Prevention of Unfair Competition and Protection of Trade Secrets (Unfair Competition Prevention Act)."

So far, the industry has pointed out that the revision work for the relevant bills has not been concretized. Since the 21st National Assembly opened on May 30, 2020, 12 related bills have been proposed, but one (by lawmaker Go Min-jung) was withdrawn, nine are under review by the relevant standing committee (Industry, Trade, Energy, Small and Medium Enterprises Committee), and two remain at the reception stage.

Among these, the bill that has attracted the most attention is the one jointly proposed by People Power Party lawmaker Hong Seok-jun on June 7. This is because it specifically strengthens the punishment standards in Article 36, Paragraph 1. Under the current law, those who illegally divert national core technology abroad are subject to "imprisonment for three years or more and a fine of up to 1.5 billion KRW." Additionally, those who sell industrial technology face "imprisonment for up to 15 years or a fine of up to 1.5 billion KRW."

Hong's bill aims to raise the sentencing standards to "five years or more and up to 3 billion KRW" for core technology, and "up to 20 years and up to 2 billion KRW" for industrial technology. Hong's bill is regarded as stronger than other pending bills that seek to expand the scope of punishment from those who "divert (technology) abroad for the purpose of use" to those who "leak (technology) abroad knowing it will be used."

Both the political and industrial sectors agree with the purpose of the proposed amendments, but it is uncertain whether this bill will rise to the top priority for legislative processing among political issues. The industry is concerned that, unlike recent economic-related livelihood bills that passed the National Assembly, such as the "expansion of the fuel tax flexible rate adjustment limit from 30% to 50%" on the 2nd, this bill may have limited potential to attract explosive public interest and thus may be deprioritized.

However, the industry welcomes the fact that there is a political movement to strengthen these regulations. Especially due to cases like China’s Semiconductor Manufacturing International Corporation (SMIC), suspected of succeeding in the 7-nanometer fine process by imitating Taiwan's foundry company TSMC's technology, there is growing support for a strong revision of the law to check latecomer countries like China and protect domestic industries.

An anonymous semiconductor industry official said, "This applies to all industries, but especially semiconductors, which are called the 'rice of the industry,' and to secure high technology, you must have the 'people.' Although recent discussions on semiconductor workforce development policies are active, if existing skilled personnel are not protected, any measures will have limited effect."