The Department of Justice (DOJ) has charged today two companies –one from China and one from Taiwan– and three Taiwanese nationals for stealing trade secrets from a US semiconductor company.
The US government claims that through these actions China is breaking international fair trade agreements.
“International trade has been good for China, but cheating must stop,” said Jeff Sessions, US Attorney General, in a press conference today.
The charges are related to an export ban the US Department of Commerce announced on Tuesday, this week, barring US companies from selling components or materials to Fujian Jinhua Integrated Circuit Company, Ltd., a Chinese state-owned semiconductor firm.
Today, the DOJ filed charges against Fujian Jinhua, but also against United Microelectronics Corporation (UMC), one of Fujian Jinhua’s partners. Three individuals were also charged, including a former General Manager and Chairman of Micron’s Taiwanese branch, who later served as an exec at both UMC and Fujian Jinhua.
“I would not call [this] a cyber case,” said John Demers, Assistant Attorney General for National Security. “This is about basically poaching employees from one company to another and taking [Micron’s] intellectual property with them.”
According to the DOJ, Chen Zhengkun, who served as a former General Manager and Chairman for Micron’s Taiwan division from 2013 until 2015, stands accused of orchestrating the data theft.
Court documents say Chen left Micron’s Taiwan branch to join UMC in 2015, where, the DOJ says, he arranged a cooperation agreement between UMC and Fujian Jinhua, where UMC would provide DRAM technology that Fujian Jinhua would mass-produce in a new mega-factory the Chinese company would build.
Chen later became the President of Fujian Jinhua and was put in charge of said DRAM factory, estimated at a whopping $5.7 billion.
The DOJ alleges that while still at UMC, Chen reached out to two of his former Micron Taiwan employees, He Jianting and Wang Yungming, which he convinced to jump ship at UMC.
US investigators say the two, and especially Wang, downloaded and stole over 900 Micron confidential and proprietary files, which he kept on USB external hard drives and cloud storage accounts. The files contained proprietary files related to Micron’s DRAM design.
The charges levied today aren’t exactly new, at least not in the hardware community. Micron had previously filed a civil suit in California against both UMC and Fujian Jinhua, accusing the two of the same thing –stealing intellectual property.
Shortly after this lawsuit, the Chinese government suspiciously opened a price-fixing investigation against Micron, Samsung, and SK Hynix, while Fujian Jinhua and UMC filed their own legal case against Micron, in a Chinese court, alleging patent infringement on Micron’s part.
But it’s this Chinese government’s interference to protect its investments as part of its Made in China 2025 economic plan that got US authorities to act, first through an export ban, and now through today’s charges.
“Nearly every one of our 56 FBI field offices throughout this nation has investigations into economic espionage that lead back to the country of China,” Demers said. “We see it time and again, they have stolen wind turbine technology in Wisconsin, agricultural research in Kansas, cancer drug research in Pennsylvania, and software source code in New York.”
“What we are trying to do is show that we notice what they are doing. We can identify exactly what they are doing. We can call them out. We can, when we have a chance, to win some [cases], extradite them, and prosecute them for what they are doing. And through that, increase the pressure,” said David Bowdich, Deputy Director of the Federal Bureau of Investigations (FBI).
“The ultimate goal […] is not to have a fight with China. It is to have them behave the way other countries who have achieved that level of economic development behave and should behave,” Bowdich added.
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