[Inside Chodong] Repeated Leaks of Advanced Technology Must Be Prevented More Thoroughly

Jo In-kyung, Content Manager of the Industry Division

Last June, the prosecution indicted seven individuals, including a Samsung Electronics executive and Choi, a former vice president of Hynix Semiconductor, on charges of stealing semiconductor factory design blueprints from Samsung Electronics to build a "replica factory" in China. The damage caused by their technology leakage is estimated to be at least 300 billion KRW, potentially reaching trillions. Additional evidence has surfaced indicating that Choi also leaked Samsung Electronics' core process technologies and personnel, and he is currently under investigation. However, since there have been few cases of actual imprisonment for violations of the Industrial Technology Protection Act in South Korea, it is highly likely that Choi will receive only a lenient punishment.

Going back to 1999, during the big semiconductor business deal between Hyundai and LG that led to the establishment of Hynix Semiconductor, many engineers from LG Semiconductor moved to competing companies in China, Taiwan, and Southeast Asia, resulting in technology leakage. Chinese companies absorbed a large number of LG Semiconductor employees by offering high salaries, and Hynix Semiconductor's LCD division, Hydis, was sold to China's BOE. After losing its core technology intact, it was resold to a Taiwanese company in 2008. Taiwanese semiconductor companies also hired former LG Semiconductor employees, rapidly narrowing the technology gap with South Korea. Recently, Taiwan itself is at risk of losing advanced technologies and personnel to China, prompting the government to strengthen control and crack down on the leakage of core technologies.

Advanced technologies in South Korea, such as semiconductors and displays, have long been prime targets for industrial espionage. Over the past five years (2018?2022), the National Intelligence Service uncovered 93 cases of domestic industrial technology leakage, with estimated damages calculated based on R&D expenses and projected sales reaching 25 trillion KRW. Most of these cases involved semiconductors (24 cases), displays (20 cases), secondary batteries, automobiles, and information and communication technologies?key growth industries of the Korean economy. Among these, 33 cases were classified as national core technologies. However, only 20% of those involved in technology leakage received prison sentences. Courts have generally issued lenient punishments, citing that most offenders were first-time offenders with engineering or research backgrounds and no prior criminal records.

On the 8th, the Presidential Office launched a "Government-wide Joint Response Team for Technology Leakage," involving the National Intelligence Service, Ministry of Justice, Ministry of Trade, Industry and Energy, Ministry of Foreign Affairs, Ministry of Science and ICT, Ministry of SMEs and Startups, Supreme Prosecutors' Office, National Police Agency, Korean Intellectual Property Office, and Korea Customs Service. The Presidential Office is taking direct action to comprehensively respond to technology leakage by coordinating government ministries and intelligence and investigative agencies. This reflects the serious level of overseas leakage of our technologies and personnel and the judgment that it could worsen in the future.

Amid the intensifying US-China hegemonic conflict and the global supply chain crisis, advanced technologies including semiconductors have become a competitiveness factor that determines not only corporate but also national future and survival. Especially after the US imposed export bans on advanced semiconductor technologies and equipment to China, concerns are rising that attempts to steal South Korea's semiconductor technology in China will increase. Technology leakage to competing countries directly leads to the loss of competitiveness in national strategic industries. This not only wastes the efforts companies have invested in technology development but also threatens national economic security. No matter how world-class the technology is, once leaked, it is uncertain how long it will take to develop even more advanced technology again. This is why there is a strong call for harsher punishment of industrial technology leakage crimes. Above all, it is urgent to establish more thorough and meticulous countermeasures to prevent leakage in advance, so that no one can covet the technologies we have painstakingly developed through relentless effort.