Samsung`s Tech Secrets Leaked to Hynix: Probe

Key semiconductor technologies of Samsung Electronics have been leaked en masse to rival competitor Hynix Semiconductor over the past six years through partner companies, prosecutors said yesterday.

The procedures and equipment needed to produce 30-nano DRAM were also leaked, but whether foreign competitors got hold of the technologies and business secrets is unknown.

Arrested yesterday were the vice president and eight workers of Applied Materials Korea, a semiconductor equipment producer, on the charge of leaking the chip technologies and trade secrets of Samsung Electronics to Hynix.

A Hynix executive was also indicted on the same charge and a combined eight workers from both companies were charged.

Another AMK worker in the U.S. who moved to the company after leaking secrets as a senior researcher at Samsung has refused to return to Korea for the investigation.

○ Leaks by partner companies

Based in the U.S., AMK is the world’s largest producer of semiconductor equipment and has business relations with leading semiconductor producers in addition to Samsung Electronics and Hynix.

Prosecutors said AMK employees stole 95 business secrets from Samsung Electronics, including a manufacturing process for DRAM and NAND flash memory chips, from March 2005 and handed 13 of them to Hynix.

The leaked technologies include 40 designated by the Korean government as key national technologies.

Hynix’s partner companies, including AMK, held regular talks with a Hynix executive and transferred stolen technologies to him, prosecutors said.

AMK staff would frequently visit Samsung’s semiconductor plants ostensibly to install equipment and do maintenance work. If they found documents containing trade secrets while working, they stole them and dug up information through Samsung workers.

An indicted section chief of Samsung Electronics is known to have met an employee of the AMK Korean branch at a hotel in Silicon Valley in April 2008. The section chief reportedly gave a computer file with company secrets on development plans for DRAM, NAND flash memory, and next-generation semiconductors.

The AMK vice president took the lead in the leaks while serving as head of the company’s Korean branch. He was promoted to vice president of the head office in January last year.

A prosecutor said, however, “We found no evidence that they leaked technologies for personal interest or that cash transactions were made,” adding, “It’s a type of effort by a partner company to promote sales by helping a customer.”

“Semiconductor producers tighten security against competitors, but not against their partner companies because they trust them. Taking advantage of such trust, partner companies got access to secret information.”

○ Semiconductor sector on high alert

The scandal has sounded an alarm in the domestic semiconductor industry. Prosecutors said they found no evidence of the leaks flowing to overseas competitors, but with AMK having many business partners worldwide, such leaks cannot be ruled out.

Prosecutors said Samsung Electronics is expected to suffer damage worth billions of dollars considering that the leak could narrow the company’s technology gap with latecomers. The direct damage is estimated at hundreds of millions of dollars.

On the probe results, Samsung Electronics did not mention Hynix but said, “The leaked technologies are not only for Samsung but also for the country. So if overseas competitors get hold of the technologies, this will have a negative impact on our economy.”

For its part, Hynix said in a statement yesterday that it has never used Samsung’s technologies.

“Samsung’s copper process is completely different from ours in the used materials, characteristics, and composition of equipment. So we don’t use the process,” Hynix said. “We found that the information on Hynix was also included among data gathered by AMK.”