A former Samsung Electronics senior manager was sentenced to seven years in prison and fined KRW200 million (approx. US$138,820) by a South Korean court for allegedly leaking core semiconductor technology to China's ChangXin Memory Technologies (CXMT). Analysts warn that the breach could inflict substantial losses on both Samsung and South Korea.
The Seoul Central District Court's 25th Criminal Division sentenced Kim, a former Samsung senior manager, to seven years in prison and fined KRW200 million for violating the Act on Protection of Industrial Technology, according to Chosun Ilbo and Yonhap News Agency.
A partner company employee, identified as Bang, received two years and six months in prison. The sentence is significantly lighter than the 20-year and 10-year prison terms initially sought by South Korean prosecutors for Kim and Bang, respectively. The case remains open for appeal.
The South Korean court ruled that Kim's actions harmed semiconductor developers, wasting substantial investments in time and resources. The ruling also warned that the leak could undermine South Korea's industrial competitiveness, with Samsung potentially facing significant financial damage.
Semiconductor trade secrets leak and talent poaching allegations
Kim allegedly leaked Samsung's 18nm DRAM process technology, a national core technology, to CXMT, enabling the Chinese firm to accelerate product development. South Korean authorities officially prosecuted Kim and other suspects in January 2024.
Prosecutors found that after leaving Samsung in 2016, Kim joined CXMT, then a nascent semiconductor startup, and leaked seven key semiconductor technologies, including atomic layer deposition (ALD). He was also accused of accepting valuables worth tens of billions of KRW and colluding with Bang.
Investigators discovered that Kim accessed trade secrets from Samsung's partners, including Eugene Technology, and passed them to CXMT. He also attempted to set up a semiconductor equipment company in China to facilitate further leaks, according to The Korea Herald.
Kim and his associates allegedly poached 20 engineers from Samsung and its affiliates, offering post-tax salaries of at least KRW500 million.
However, the court only upheld trade secret infringement charges, ruling that Eugene Technology's ALD technology did not qualify as "industrial technology" under South Korea's Act on Protection of Industrial Technology.
Investigations and CXMT's expansion
In May 2023, South Korea's National Intelligence Service (NIS) uncovered Kim and Bang's involvement in the technology leak and urged prosecutors to investigate. The Seoul Central District Prosecutors' Office formally indicted both in January 2024.
Established in 2016, CXMT has emerged as a key player in China's semiconductor sector. The global DRAM market is dominated by Samsung, SK Hynix, and Micron, but CXMT is rapidly expanding, using aggressive pricing to challenge Micron. Its market share currently stands at 5% and is projected to reach 10% by year-end.
CXMT's DRAM technology has advanced swiftly, with analysts warning it could challenge Samsung and SK Hynix shortly. To support China's semiconductor self-sufficiency push, CXMT is scaling up production capacity, increasing output from 70,000 wafers per month in 2022 to 200,000 wafers per month by late 2024, accounting for 15% of global DRAM supply.
