Tue, Jul 03, 2018 - Page 1 News List

China is raiding local chip firms for secrets: ‘WSJ’

By Jonathan Chin  /  Staff writer

China has been systematically raiding Taiwan for trade secrets and technology in the chipmaking sector, the Wall Street Journal (WSJ) said on Sunday, calling Taiwan “ground zero in a covert war for the technology that increasingly powers the modern global economy.”

The story, headlined “Taiwan’s Technology Secrets Under Assault From China,” cited court cases, including some that are still ongoing, showing commercial espionage incidents had more than doubled from eight in 2013 to 21 last year.

Manufacturers that have fallen victim to trade secrets theft include Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker; the local unit of Micron Technology Inc, the largest US-based chipmaker; and Nanya Techology Corp (南亞科技), the world’s fourth-largest chip supplier, the WSJ said.

In nine out of 10 recent semiconductor-related court cases analyzed for the story, Taiwanese prosecutors said the stolen technology was intended for China-based firms, the WSJ said.

The Chinese entities that benefited from the alleged commercial espionage were not named for political reasons and because the authorities do not believe legal sanctions could be enforced in China, unnamed Taiwanese officials and attorneys were cited by the newspaper as saying.

Among the cases cited by the WSJ was that of a TSMC engineer identified as Hsu Chih-peng, who in 2016 copied TSMC trade secrets about 28-nanometer process technology after being asked if he was interested in a job as a chief engineer designing chips for game consoles and cellphones at China’s state-owned Shanghai Huali Microelectronics Corp (華力微), something that he did not have a background in.

The Hsinchu District Prosecutors’ Office in May last year charged Hsu with breach of trust and contravening the Trade Secrets Act (營業秘密法), and he was later found guilty.

In another case from 2016, Micron engineer Wang Yong-ming (王永銘) allegedly stole production-design secrets for Hsinchu-based United Microelectronics Corp (UMC, 聯電), which later used the data to help China-based Fujian Jinhua Intergraded Circuits Co (晉華集成電路), the WSJ said.

Wang and UMC executives were indicted in August last year by the Taichung District Prosecutors’ Office for theft and the illicit use of trade secrets.

Micron, which is now engaged in a separate litigation against Fujian Jinhua in California, alleges that the Chinese firm had masterminded the corporate espionage to obtain the technology to produce a type of chip on its own, bypassing years of research and development, the WSJ said.

Fujian Jinhua has denied the allegations, saying that “international oligopolists” are blocking China from technological progress, the newspaper said.

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