Korea Nabs Ex-Samsung Execs in China Chip Tech Scandal

Two former Samsung executives accused of stealing chip tech – and using it to make memory chips at a plant in southwest China – have been arrested by police in South Korea.

The Seoul Metropolitan Police Agency alleges that Mr Choi Jinseog, 66, a former executive at Samsung Electronics and Hynix, who was an expert in the manufacturing of semiconductors, set up a joint venture production facility called Chengdu Gaozhen with district officials and $342 million from the Chengdu city government in 2020.

Choi allegedly recruited ‘Mr Oh’, a senior DRAM memory chip researcher at Samsung, plus about 200 other Korean engineers to work at the plant, according to local media and wire agencies.

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Choi and his colleague ‘Oh’ have been accused to stealing Samsung’s core technology and using it to produce 20-nanometre DRAM computer chips in the first half of April 2022.

A senior police investigator told local reporters that Chengdu Gaozhen managed to produce demonstration wafers in just 15 months after the factory was launched, despite the fact most new chip plants need four to five years to develop a new chip.

The Seoul Central District Court issued a warrant last Thursday to detain Mr Choi due to concern that he was a flight risk, according to a report by Reuters last Friday.

It said Choi had been the subject of a high-profile industrial espionage trial since July 2023, but had been released on bail last November. He had rejected the charges, but new allegations had been made about the theft of information about 20-nanometre DRAM chip processing from Samsung, according to his lawyer.

Choi was an award-winning engineer “once seen as a star in South Korea’s chip industry,” it said.

Kim Pilsung, Choi’s lawyer, told Reuters his client denied any wrongdoing and said the information he is accused of stealing is publicly available. The lawyer said Choi had not been indicted [yet] over the new allegations.

Mr Oh is accused of becoming head of process design at Chengdu Gaozhen.

Alarm over rise in ‘critical tech’ crimes

Police from Seoul’s Industrial Technology Security Investigation Unit said the economic value of the leaked technologies amounted to about 4.3 trillion won (about $3.2 billion).

A Business Korea report on Monday quoted a police official as saying: “This case has shaken the foundation of economic security by attempting to produce semiconductors with domestic technology through direct collaboration of a domestic semiconductor company and a local Chinese government, leading to a potential weakening of national competitiveness.”

The scandal has intensified concern about the threat of technology crimes, with calls for harsher penalties to try to stop the outflow of critical technology to China and other countries amid the intensifying chip rivalry between the US and China.

“This case highlights the urgent need to strengthen technology security in South Korea,” Choi Won-seok, a senior researcher at the Korea Institute for International Economic Policy, was quoted as telling the South China Morning Post.

In the first half of this year, Korean authorities have probed 12 cases of technology thefts by foreign entities – 10 of them involving China, the report said, and that figure was up from eight during the same period last year.

Korean government MPs say these sorts of crimes are a threat to some of the country’s most important industries.

Lawmakers from the ruling People Power Party introduced a bill recently to boost the penalties that offenders face from three to five years in jail, along with fines of up to 10 times the profit gained from such crimes.