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Samsung engineer sentenced to 7 years in prison for selling chipmaking trade secrets to Chinese chipmaker — ex-employee supplied 10nm DRAM data to CXMT for $2 million
Late last year, 10 former Samsung employees were indicated in a corporate espionage case in which they were accused of leaking critical chipmaking IP to China's CXMT. Today, a South Korean court has found one of the accused guilty. The court sentenced 56-year-old "Jeon" to seven years in prison on charges of violating the region's Industrial Technology Protection Act. The defendant purportedly stole over 600 detailed steps on DRAM manufacturing, according to Reuters.
The court deemed the accused shared information on "core national technology" that caused South Korea potentially trillions in losses — since leaking it gave a head start to CXMT, which consequently ended up debuting 10nm-class HBM2 memory much earlier than expected. Interestingly, the court did consider Jeon's low compensation at Samsung at the time of the crime, calling it a "mitigating factor" when presenting the final sentence.
Estimates put Samsung's R&D costs for 10nm DRAM at around 1.6 trillion KRW ($1.08 billion), spread across five years. Jeon left Samsung to work for CXMT around this time, and was thought to have shared chipmaking secrets via handwritten notes. CXMT was manufacturing 17nm DRAM in 2022 and jumped to 10nm in 2023 — a huge improvement for a fab with otherwise limited access to cutting-edge lithography tools.
The prosecution argued Samsung's stolen IP contributed to CXMT's abrupt growth. This alone would have been enough for an indictment, but the opportunity cost of lost sales (customers opting for CXMT over Samsung) was the final nail in the coffin. Moreover, Jeon received 2.9 billion KRW ($2 million) in exchange for the information he shared with the Chinese company, as well as stock options and other contract incentives.
Recently, HP was reported to be considering Chinese companies to supply memory amidst the growing component shortage. Asus and Dell are also interested in delegating some of their memory needs to China, since the major DRAM manufacturers are all laser-focused on making HBM for AI accelerators. CXMT is part of the "Section 1260H" list of foreign companies suspected of aiding the Chinese military, but it's not banned in the U.S. yet.
Hassam Nasir is a die-hard hardware enthusiast with years of experience as a tech editor and writer, focusing on detailed CPU comparisons and general hardware news. When he’s not working, you’ll find him bending tubes for his ever-evolving custom water-loop gaming rig or benchmarking the latest CPUs and GPUs just for fun.
IMO, there is some missing context with regards to the desirability of Samsung HBM.
Samsung was famously late to the AI bubble and HBM. They were so late, in fact, they couldn't dip into the AI data center craze and weren't as profitable as SK Hynix, and Micron during the timeframe.
Nvidia had previously rejected Samsung HBM due to performance issues. (AFAIK, runs too hot)
Samsung had to delay HBM3, HBM3E, HBM4, and now it seems also HBM5E (10nm) due to severe yield issues. They have a history of this, so IDK about the "lost sales to CXMT" aspect.
Lastly, to no ones surprise, CXMT is also running into issues with their HBM3 production. Presumably, all the same mistakes Samsung made were copied verbatim.
The usual suspects involved with IP theft again, seems stealing the work of others is as natural as breathing. Laws need to be expanded and penalties increased substantially, such that anybody who is caught will be buried under the prison.
Why is he being sentenced? Half of Samsung's directive team was involved in the RAM cartel of the early 2000's and they're still in charge and were even promoted.
Corruption in South Korea really is something else.
Why is he being sentenced? Half of Samsung's directive team was involved in the RAM cartel of the early 2000's and they're still in charge and were even promoted.
Corruption in South Korea really is something else.
Their corruption isn't a valid reason not to charge him...
