AI Semiconductor Design Leak at SK Affiliate Leads to Trial for Former Employees

External Transfer of Neural Processing Unit (NPU) Design Data... Estimated Value at 28 Billion Won
Former Sapeon Employees Accused of Using Data After Moving to New Company
Government Strengthens Security for National Core Technologies Including AI Semiconductors

Former employees of Sapeon (now Rebellions), an SK Group AI semiconductor company, and the AI semiconductor startup Dinotisia, to which these employees transferred, have been indicted on charges of leaking neural processing unit (NPU) design data developed by Sapeon. The government and investigative authorities are increasingly strengthening the management of national core technologies, not only for large corporations but also for startups. This case has drawn particular attention as it emerged at a time when the need for enhanced technology security is growing, following a technology leak incident involving TSMC overseas.

According to legal and semiconductor industry sources on August 8, the Defense Business and Industrial Technology Crime Investigation Division of the Suwon District Prosecutors' Office (Chief Prosecutor Park Kyungtaek) indicted Dinotisia's team leader-level engineers, identified as A and B, on August 6 on charges of violating the Industrial Technology Protection Act, the Unfair Competition Prevention Act, and occupational breach of trust. They were indicted while in detention. Dinotisia's CEO, identified as C, was indicted without detention. Dinotisia, founded by C, was also brought to trial.

The central issue in this case is the source code and architectural data of a state-of-the-art NPU. This information is equivalent to the blueprints that determine the performance and efficiency of semiconductors, and if leaked overseas or to competitors, years of research and development (R&D) achievements could be nullified in an instant. Prosecutors estimated the value of the leaked materials at 28 billion won. Industry insiders believe that the leakage of technology of this scale could deal a direct blow not only to product competitiveness but also to supply chain trust.

According to prosecutors, all three individuals previously worked at Sapeon, a company in the same field as Dinotisia, before moving to their current company. C is suspected of having stolen data before Sapeon was absorbed and merged into the AI semiconductor developer Rebellions, then resigning and founding Dinotisia. Subsequently, A and B also left Sapeon and joined Dinotisia as team leader-level engineers.

During this process, A is accused of leaking various technical materials, including AI semiconductor source code owned by Sapeon, by transferring them to external hard drives on three occasions between January and April last year. Prosecutors stated that A accessed the source code around October last year and that there is evidence suggesting that in April this year, A made it available for viewing by another employee. Dinotisia has stated that this material was never used in the development of its own AI semiconductor (VDPU) and that the relevant technology was independently designed and developed.

B is also accused of leaking Sapeon's AI semiconductor source code by uploading it to a personal cloud account on two occasions between January and June last year. When B resigned from Sapeon in June last year, B retained AI semiconductor architectural data stored in the personal cloud account instead of deleting it, and after transferring to Dinotisia, accessed this data around July to August this year for reference in Dinotisia's AI semiconductor development. C is also accused of leaking Sapeon's AI semiconductor architectural data via an external hard drive when resigning from Sapeon in March 2023.

Prosecutors stated, "Source code and architectural data are equivalent to the blueprints of semiconductors," and pointed out that "for a fabless company like Sapeon (a company specializing in semiconductor design), it is as if all of its assets have been stolen in their entirety."

Dinotisia, which has been identified as the destination for the leaked technology, issued a statement the previous day refuting the main allegations. Dinotisia emphasized that the company "was not aware of any technology leakage, and the individual actions of its members are unrelated to the company's strategic direction or technology development." The company explained, "Since its founding, Dinotisia has consistently focused solely on developing 'hardware accelerators for vector databases (VDPU)' and AI solutions." The company clarified that VDPU development has been its primary focus and that this is a completely separate technology from Sapeon's NPU.

There is analysis that prosecutors are likely to expand and intensify investigations targeting AI companies in the future. Since the inauguration of the new administration, new organizations related to AI have been established and a series of policies have been introduced to bolster the sector. Through this case, the government has demonstrated its stance of imposing strict punishment for unfair crimes through prosecutorial investigations. The Suwon District Prosecutors' Office, which has been designated as a key office for advanced industry protection, is likely to take the lead. A representative of the Suwon District Prosecutors' Office emphasized, "For the domestic AI semiconductor industry to grow sustainably and competitively, it is essential to respond strictly to unfair practices such as technology leakage."

Recently, as global awareness of such technology leak incidents has increased, efforts to strengthen security are spreading throughout the industry. In Taiwan, it was revealed that the 2nm (1nm = one billionth of a meter) process design blueprint of TSMC, the world's largest foundry (semiconductor contract manufacturer), had been transferred to a Japanese company, resulting in the arrest of former and current employees on charges of violating the National Security Act.

There have also been emergency arrest cases in South Korea to prevent the overseas transfer of core technologies. Individuals attempting to leave the country with national core technologies such as semiconductor packaging equipment or high value-added materials were apprehended at Incheon International Airport or Gimpo Airport. The technologies involved included high-bandwidth memory (HBM) packaging technology and semiconductor process component manufacturing technology, with many cases identified as attempts at indirect transfer to China or third countries.

As cases of technology leakage in key manufacturing sectors continue to be detected both domestically and internationally, investigations and management of related crimes are expected to be further strengthened. The government and investigative authorities are tightening security regulations throughout all stages, from R&D to personnel transfers, partner contracts, and data export controls, while the industry itself is also raising its own security investments and management standards.