Korean, US Chip-Makers Mired in Spy Case

Seoul. The world’s top producers of computer memory chips are embroiled in an case of industrial espionage after South Korean prosecutors indicted 18 people over alleged technology theft.

Prosecutors said on Thursday those involved — including employees of US company Allied Materials and its South Korean unit — were suspected of leaking semiconductor technology belonging to South Korea’s Samsung Electronics to its domestic rival Hynix Semiconductor.

The case highlights the intense competition among chipmakers and other sellers of high tech products, who frequently sue each other over alleged patent infringements.

Samsung and Hynix are the world’s top two producers of dynamic random access memory, or DRAM, chips, used mostly in personal computers. Samsung is the world’s biggest manufacturer of NAND flash chips, used in digital devices such as cameras, music players and smartphones. Hynix ranks number three in NAND, behind compatriot Samsung and Toshiba of Japan.

Prosecutors indicted 18 people, though 14 were not physically detained ahead of trial, said Kim Yeong-cheol, a prosecutor handling the case. He said prosecutors were seeking a former Samsung employee for questioning.

The technology is believed to have been obtained by employees of the South Korean arm of Applied Materials, a US company that makes equipment for chip manufacturers including Samsung, and then passed on to Hynix, according to prosecutors.

The local operation of Applied Materials had access to Samsung’s “core technology” through installing and maintaining the company’s chip manufacturing equipment, prosecutors said.

Indicted and being held were one employee each from Samsung and Hynix, the former head of the South Korean arm of Applied Materials — who currently serves as a vice president of the US company — and one of the South Korean unit’s current employees, prosecutors said.

Kim, the prosecutor, said no decision had been made whether to seek the extradition of a former Samsung employee who is working for Applied Materials in the US. That person is suspected of leaking Samsung technology to Applied’s South Korean arm.

Applied Materials said it was aware of the actions by prosecutors and confirmed that its vice president and some employees of Applied Materials Korea were indicted and detained.

“Applied believes that there are meritorious defenses to the charges and is taking appropriate measures to address this matter,” the company said in a filing to the US financial market regulator. “Applied has strict policies in place to protect the intellectual property of its customers, suppliers, competitors and other third parties, and takes any violation of these policies seriously.”

Samsung said it was concerned over the case and Hynix expressed “great regret.”

“We are very concerned by this transgression as it is likely to damage the semiconductor market,” said Samsung spokeswoman Lee Soo-jeong. “We plan to take appropriate measures.”

“Hynix expresses its great regret that our employees have gotten involved in this case,” said spokeswoman Park Seong-ae.



Associated Press

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