In March 2019, an employee at a semiconductor partner company of SK Hynix entered an SK Hynix business site with a USB drive hidden inside their sock. Capturing mass-production recipes (process design blueprints) on the input screen of operating cleaning equipment and saving them to the USB, the employee gathered a total of 15 core manufacturing blueprints for cleaning processes, combining them with another set of secretly extracted materials.

The national core technology data of SK Hynix thus extracted was emailed to an employee at ChangXin Memory Technologies (CXMT), China's top memory semiconductor company. Subsequently, despite SK Hynix's refusal to agree to exports due to concerns over technology leakage, Mujin Electronics exported seven cleaning equipment units—worth approximately 37.7 billion won—jointly developed by both companies to CXMT. However, the sentence handed down to this employee was merely 8 months in prison with a 2-year suspended sentence.

The crimes continued. Shin, a vice president and head of the semiconductor equipment business division at Mujin Electronics, led criminal activities—such as contacting the Chinese side following the export of cleaning equipment to CXMT in May 2017, poaching core talent from the domestic industry at the time, and illicitly acquiring technical information to utilize in equipment development. Regarding this, the Supreme Court finalized Shin's punishment at just 1 year and 6 months in prison.

Comprehensive Analysis of Semiconductor Verdicts: Average Sentence of 2 Years and 7 Months

On the 29th, the JoongAng Ilbo conducted a comprehensive analysis of rulings in semiconductor technology leakage cases handed down over the past 20 years under charges of violating the Unfair Competition Prevention Act and the Industrial Technology Protection Act. Among 90 defendants across 24 cases, 44 received prison terms (48.9%), 44 received suspended sentences, while one received a fine and one was acquitted.

The average prison term for those incarcerated was about 2 years and 7 months. Among the 44 who received prison sentences, 18 (40.9%) were sentenced to over 1 year and up to 2 years. Those sentenced to over 2 years and up to 3 years numbered 10, over 3 years and up to 5 years numbered 8, and those with 1 year or less numbered 5. Cases exceeding 5 years accounted for only 3 (6.8%). The highest sentence was 7 years in prison, handed down to a defendant surnamed Jeon who was indicted on charges of leaking and using Samsung Electronics' 18-nanometer DRAM technology for CXMT.

The destination for smuggled domestic technology was predominantly China. Out of 24 cases, 18 (75%) were related to China, and 82 out of 90 defendants (91.1%) were connected to China. A repeating structure emerged across multiple cases: Chinese companies scouted core Korean engineers, who then lured back colleagues and previous company technologies, leading to the development of copied equipment and the establishment of local production lines.

In particular, 19 out of the 24 technology leakage cases occurred after the late 2010s, when China accelerated its "Semiconductor Rise." Targets expanded from memories like DRAM, NAND flash, and High Bandwidth Memory (HBM) to overall semiconductor ecosystems including cleaning, ultrapure water, vacuum pumps, and packaging. Park Hyun-chul, an LKB & Partners attorney who primarily handles technology leakage cases, noted, "The focal point of advanced technology leakage is rapidly shifting from past areas like batteries and displays to the semiconductor equipment sector that China desires most desperately," adding, "Methods are becoming bolder and more sophisticated, moving beyond core talent turnover to the simultaneous leakage of design blueprints or entire equipment being copied wholesale."

Money was indeed what motivated people. One individual involved in a semiconductor CMP (Chemical Mechanical Planarization) process technology leakage case was offered a pretax annual salary of about 380 million won, a 10% stake, and a company president title. Another figure was offered a net take-home pay of over 250 million won, a 5% stake, and a vice president-level title. Another engineer saw their contracted annual salary jump 4.5 times from about 70.57 million won to approximately 320 million won in their first year of moving to China.

The process of exchanging technology was covert. In the "A" cleaning equipment technology leakage case, the parties conversed, saying, "After sending the specification email, use WeChat only. Don't talk about sensitive things over email." In case "B," they discussed, "Let's leave the server in Korea, go empty-handed, and download it from there."

There were also instances where the law failed to keep pace with technological development. In the case involving the leakage of SK Hynix's CIS (Complementary Metal-Oxide Semiconductor Image Sensor) process hybrid bonding technology, the Seoul High Court ruled in April that the technology could not be deemed as an advanced technology designated by the government at the time of the crime, rendering the charge of violating the Industrial Technology Protection Act not guilty. Although hybrid bonding is cited as a core technology for next-generation HBM, a loophole in criminal punishment was created because the technology emerged first, followed later by the designation of protection targets.

Vulnerabilities in corporate internal security networks were also exposed. In a case involving SSD controllers—which handle the core functions of Solid State Drives—an employee posted technical data on a personal blog 289 times before being detected. Just two days later, the employee displayed security data on an office screen and directly inputted the related information onto their iPad to smuggle it out. In the SK Hynix hybrid bonding case, while storage devices like USBs were blocked, there were no restrictions whatsoever on photographing data screens to steal information.

"Decisively Punish Technology Leakage," Political and Industrial Circles Speak in Unison

As concerns over industrial espionage grow, a revised Criminal Act expanded the application of the crime of espionage from traditional "enemy states" to "foreign countries or equivalent entities," taking effect on the 13th. Acts of detecting, collecting, leaking, or delivering state secrets for a foreign country can now also be punished as espionage. In response, the Chinese government showed a sensitive reaction, stating, "Normal investment and management activities must be guaranteed, providing a fair, equitable, and non-discriminatory business environment."

However, within the country, criticisms persist that punishments and systems remain lax compared to the severity of technology leakage. Consequently, People Power Party lawmaker Koh Dong-jin proposed an amendment last month to add foreign corporations and national core technologies to the targets of the espionage law and raise the statutory penalty to 10 years or more in prison. Democratic Party of Korea lawmaker Park Kyun-taek also proposed a special bill on aggravated punishment for industrial spies last month on the 24th, containing provisions to impose fines of up to 10 billion won for individuals and up to 20 billion won for corporations.

The industrial sector is also going all-out to block technology leakages. The Korea Enterprises Federation (KEF) formed a task force (TF) with major companies such as Samsung Electronics, SK Hynix, Hyundai Motor, and Hanwha Ocean to recommend institutional improvements to the government and political circles. Lee Dong-geun, executive vice chairman of KEF, stated, "To establish the perception that stealing technology will definitely entail paying a price, we must secure substantial deterrents," adding, "We must also block the perception that 'it's a profitable business even if caught' through the confiscation and recovery of criminal proceeds."

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