Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Korean tech firms struggle to contain technology leaks
LG Display plant in Paju, Gyeonggi Province / Courtesy of LG Display
By Nam Hyun-woo
Korean firms are reeling from continued technology leaks, as each case snowballs into losses worth trillions of won and helps Chinese rivals close existing technology gaps.
According to the Seoul Metropolitan Police, Monday, its industrial technology security investigation unit raided LG Display’s plant in Paju, Gyeonggi Province, Oct. 2, on suspicion that two of the company’s employees had illegally handed over display technologies to a Chinese company.
Reportedly, police have secured evidence including hundreds of photos of the company’s internal documents.
The day before searching LG Display, police also raided Samsung Display’s plant in Asan, South Chungcheong Province, following suspicions that the company’s latest organic LED display technologies had been leaked to a Chinese firm.
The two cases are the latest in a series of technology leaks across Korea’s high-tech industries, including semiconductors, displays and rechargeable batteries. According to police, there were 27 cases of overseas technology leaks last year and eight more in the first half of this year, most of which were linked to Chinese firms.
On Oct. 1, prosecutors indicted three former Samsung Electronics officials on charges of illegally using the company’s DRAM technologies to develop products at China’s CXMT.
The leaked technology involves Samsung’s key 18-nanometer DRAM manufacturing process, which the company developed as a world first, with an investment of 1.6 trillion won ($1.16 billion).
According to prosecutors, the three obtained the DRAM technology from two other former Samsung officials who had been previously indicted, and developed the DRAM by dismantling Samsung products, verifying the leaked data and conducting manufacturing tests.
These technology leaks are believed to have caused huge economic losses. According to data from the Ministry of Trade, Industry and Energy submitted to Rep. Kim Dong-ah of the Democratic Party of Korea, a total of 33 national core technologies and 105 industrial technologies were leaked overseas between 2020 and June this year, with accumulated losses estimated at 23.27 trillion won.
Under the Act on Prevention of Divulgence and Protection of Industrial Technology, national core technologies refers to any tech that has a significant impact on national security or the economy, meaning that any leaks to overseas entities could severely undermine the country’s competitiveness and safety.
A Samsung Electronics semiconductor plant in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics
Despite the growing damage, industry officials said punishment for technology leaks remains lenient.
Under the industrial technology protection law, violators can face prison terms of up to 15 years or fines of up to 6.5 billion won. The Unfair Competition Prevention and Trade Secret Protection Act also imposes up to 15 years in prison.
In reality, however, punishments are often far lighter. In June, a vice president at a SK hynix partner company was sentenced to only one year and six months in prison for leaking the chipmaker’s core semiconductor technology to a Chinese competitor. Many other cases have ended with suspended sentences.
According to a 2023 report by the Korea Enterprises Federation, 87.8 percent of the 33 technology leak cases handled by lower courts in 2021 resulted in either acquittals or suspended sentences.
“Each technology leak causes tremendous losses, so we hope the government will take stronger action to help prevent them,” Samsung Display CEO Yi Chung said during the 16th Display Day event in Seoul on Sept. 26.