Former exec accused of trying to clone entire Samsung chip fab on Chinese soil

A former executive at Samsung Electronics is being detained in South Korea over allegations of theft involving detailed information to help build a replica of one of the corporation's chip factories in China.

According to reports, prosecutors in South Korea have indicted the unnamed executive, who is also said to have worked for Korea's other major memory chip maker, SK hynix, for allegedly taking "blueprints and designs".

The trade secrets are believed to have been taken sometime around 2018 or 2019, with the aim of building a chip plant in the Chinese city of Xi'an in Shaanxi Province, according to prosecutors in Suwon, south of the Korean capital Seoul.

Bloomberg quotes the Suwon District Prosecutors Office as saying this is a very serious crime, and difficult to compare with previous semiconductor-related incidents because it involves an attempt to reproduce an entire chipmaking facility rather than poaching key technical staff or designs for specific components.

The 65-year-old executive in this case is said to have founded several chip manufacturing companies in China and Singapore, and is alleged to have tried to build the replica factory just a mile (1.5 km) away from Samsung's own semiconductor facility in Xi'an.

According to Korea's Yonhap News Agency, the accused executive acquired chip plant basic engineering data (BED) and process layout and design drawings for the manufacturing of sub-30nm DRAM and NAND flash chips.

The executive has been charged with violating Korea's industrial technology protection and unfair competition prevention laws, along with six other people including employees of a Chinese company established by the defendant.

Ironically, it appears the plans to build a doppelganger of Samsung's manufacturing plant may have foundered only because a Taiwanese company reversed its decision to invest $6.2 billion in the project.

Samsung told us it had "no comment" at this time.

These revelations are likely to be seized upon by parties such as the US government which have previously warned that Beijing is attempting to build up its semiconductor capabilities by any means possible, even if that means stealing advanced technology from other countries.

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It could see further pressure on South Korea to tighten restrictions on China, just as the country has been trying to convince Washington to ease off on restrictions against Korean companies that have interests in China.

The Netherlands, which has also been persuaded into joining US efforts to block advanced technology exports to China, is now reportedly planning to ban Chinese students from technology courses in the country.

According to Bloomberg, the planned legislation is unlikely to specifically single out China, but the intention will be to prevent students from that country getting access to sensitive material via their studies in the Netherlands.

The country is home to ASML, which specializes in the development of photolithography equipment used in the manufacturing of semiconductors, and which earlier this year accused a former China-based employee of stealing its trade secrets on behalf of China.

Beijing is not necessarily taking this lying down. Last month, China declared that products from US-based memory chipmaker Micron had failed a security review, leading to China-based companies such as server makers Inspur and Lenovo canceling orders for Micron products.

Now the country's antitrust regulator has taken an interest in Intel's planned acquisition of Israeli chip firm Tower Semiconductor. According to reports, China's State Administration for Market Regulation asked the parties to submit additional materials relating to the planned takeover.

The move could spell trouble for Intel as a deal termination deadline is said to be coming in August. The proposed $5.4 billion acquisition had already run into trouble last year when another semiconductor company, IQE, filed a lawsuit against Tower Semiconductor claiming it had misappropriated IQE's intellectual property. ®