Samsung, SK on high alert as more chip engineers move to foreign rivals

A former senior engineer of Samsung Electronics, center, is escorted out of the Seoul Central District Court in Seocho District, Seoul, after being questioned on charges of leaking key semiconductor technologies to a Chinese company, Jan. 16. Yonhap

Samsung Electronics and SK hynix are closely monitoring a troubling trend of technology theft involving ongoing efforts to poach talent, not only from Chinese chip companies but also from their American counterparts.

Despite efforts by companies to enhance security measures and bind talents through non-compete agreements, attempts to recruit professionals and poach the advanced technologies of Korean companies are expected to increase at a time when securing technological supremacy in the semiconductor sector has become crucial in the era of AI, according to industry sources and experts on Monday.

Instances of technology leakage and theft have surfaced once again as a former engineer from SK hynix, a leading player in the high-bandwidth memory (HBM) market crucial for AI services, transitioned to the U.S. chipmaker Micron.

The engineer, who was in charge of chip design for DRAM and HBM memory at SK hynix, moved to Micron in July 2022, right after retiring from the Korean company. He made the transition to the firm despite having agreed with SK hynix not to work for a rival company for the next two years following his retirement.

In response, SK hynix filed a lawsuit against the engineer to prevent him from working for its rival last August. A local court ruled that the former employee cannot work for Micron until July 26 and must pay SK hynix 10 million won ($7,637) per day if he violates the ruling.

The industry perceives technology leakage as a significant issue, particularly considering the approximately seven months it took for the court to reach a decision. In the competitive HBM market, where SK hynix vies for market dominance alongside Samsung and Micron, the margin of technological difference is only a matter of a few months.

"The engineer who moved to Micron is known to be a key figure in HBM development. It remains unclear why he violated the non-compete agreement for two years and moved to Micron. Technology and personnel leaks occur in most cases during the job change process, and while the law does not solve everything, it is necessary to emphasize that strong penalties will be imposed if semiconductor technologies that fall under national industrial secrets are leaked," Lee Jong-hwan, a professor at the Department of System Semiconductor Engineering at Sangmyung University, said.

Samsung Electronics, as well as SK hynix, have suffered damage due to technology leaks. A former Samsung engineer was investigated in January for allegedly transferring the production process of the 20-nanometer DRAM chip, developed by Samsung in 2014, to a Chinese chip company. Additionally, last year, one of Samsung's chip executives came under scrutiny for misusing engineering data from the semiconductor factory between 2018 and 2019.

According to the Ministry of Trade, Industry and Energy, the number of cases involving the cross-border leakage of industrial technology increased from 14 in 2019 to 23 in 2023. During the same period, the number of chip-related cases increased from three to 15. This highlights the severity of technology leaks in the semiconductor industry compared to other sectors.

“Hiring professionals at a rival company is the best way to quickly bridge the technology gap. The government needs to strengthen manpower management for these engineers in collaboration with companies," the professor added.

At present, the government is actively working to bolster penalties aimed at preventing the leakage of national core technologies. Bills proposing strengthened penalties have been introduced in the National Assembly. In November, the Trade, Industry, and Energy Committee of the Assembly endorsed an amendment to the Industrial Technology Protection Act, which facilitates punishment for the leakage of national core technologies.

The current law solely delineates penalties for instances of technology leakage with the intention of use or enabling use in foreign countries. However, concerns have been raised regarding the difficulty in substantiating the intention of use in foreign countries, making it challenging to enforce penalties.

Kim Dae-jong, a professor of business administration at Sejong University, said that Korean companies need to make efforts to improve the treatment of their engineers.

"Companies should strengthen compensation for their core workers. It is necessary to provide them with sufficient treatment to increase job satisfaction and implement a system that can sufficiently extend their professional lifespan. Building a positive relationship with them is crucial," Kim said.