Crime

Chinese Company Charged with Stealing Trade Secrets from Idaho Firm

Taiwanese firm United Microelectronics Corporation (UMC), Chinese state-owned Fujian Jinhua Integrated Circuit, and three former employees of the Taiwan branch of Micron Technologies were charged for corporate espionage and economic theft.

The indictment, which was unsealed by the Justice Department on November 1, alleges that UMC and Fujian Jinhua Integrated Circuit began working together in January 2016. Their goal was to develop leading-edge dynamic random-access memory (DRAM) chips.

Like many Chinese companies, instead of developing the technology on their own, the two companies decided to simply steal it. Micron, whose headquarters are in Idaho, currently holds between one-fourth and one-fifth of the DRAM global market and was a relatively easy target.

The first step in the crime was for UMC to lure three employees at Micron Technology’s Taiwanese subsidiary away from the firm. Chen Zhengkun left in 2015 and went to work soon after for UMC. He Jianting left Micron in October 2015 and started with UMC the next month. A third, Wang Yungming, left at a later time.

According to the federal case filing, Jianting brought out with him numerous “confidential and proprietary materials” about the company’s DRAM. Wang Yungming allegedly did something similar, resulting in moving over 900 Micron proprietary files to remote storage and then bringing them to UMC.

In September 2016, UMC and Fujian filed patents for DRAM technology which are alleged to have had to have come rom Micron. According to the indictment, the information used to develop the patnets “could not have been obtained through reverse engineering” alone of Micron’s products.

In February 2017, Taiwanese authorities tipped to the case raided UMC’s offices as well as the homes of both Yungming and Jianting. They found records of trade secrets taken from Micron in their searches, along with proof that Ho and Wang had attempted – before the raids -- to hide devices which held trade secrets.

The three men charged in the case, if found guilty, could end up in prison for 25 years and having to pay a $5 million fine. The two companies, charged separately, could be forced to give up assets and pay a fine of over $20 billion.

In addition to the criminal charges, the Justice Department also filed a civil lawsuit against the companies. That lawsuit demands an injunction to block either UMC or Jinhua from selling any products in the United States using the stolen technology.

Micron Technologies has also filed a civil suit against UMC or Jinhua, in the U.S. District Court for the Northern District of California.

As a rule, American companies with advanced technology are targeted by Chinese companies, often with support from the Chinese military.