Chinese semiconductor manufacturer Fujian Jinhua Integrated Circuit Co. has been found not guilty in an economic espionage trial that began in 2018, according to a report from Bloomberg. U.S. Department of Justice (DOJ) prosecutors alleged Fujian Jinhua conspired to steal industry secrets from American memory juggernaut Micron with Taiwanese fabbing company UMC. The ruling of not guilty is a remarkably cool spot in what is a hot trade war between the U.S. and China.
In 2018, during the Trump administration, the DOJ charged not only Fujian Jinhua, but also two engineers from Taiwanese foundry UMC, with economic espionage. Prosecutors claimed Fujian Jinhua conspired with the two engineers, who formerly worked at Micron, to acquire Micron's memory chip design. The three defendants never appeared in court since neither China nor Taiwan have extradition treaties with the U.S., despite Taiwan being a key ally of the U.S.
UMC was charged separately in its own trial with economic espionage and theft of trade secrets. That case ended in 2020 with UMC taking a plea deal, which dropped the espionage charges and required the Taiwanese company to pay $60 million. UMC then assisted the DOJ in its case against Fujian Jinhua. However, that assistance was apparently not enough to win the Fujian Jinhua case; had the espionage charges against UMC stuck, they might have made a big difference.
Micron, despite being the victim in the case, might not have been very enthusiastic about pursuing the charges against Fujian Jinhua. The two companies actually reached a civil settlement in December in which both dropped their claims, which certainly doesn't indicate Micron had a desire to punish Fujian Jinhua. The civil trial, which began in 2017, is separate from the criminal trial — so it had no bearing on the espionage charges.
Micron is continuing to invest in its business in China, suggesting it wants to cool things down. However, there are still issues to be resolved, since Micron memory products are banned from "operators of critical information infrastructure" and the company is currently a defendant in a patent infringement case against YMTC — China's largest NAND manufacturer.
Had Fujian Jinhua been found guilty of economic espionage, it would have been on the hook for $20 billion. While the U.S. probably doesn't have a mechanism to truly force the Chinese company to pay up, it would have undoubtedly prevented Fujian Jinhua from doing any business in the U.S — and that alone could have been fatal.
The 'not guilty' verdict could be a sign that the U.S.-China trade war is beginning to cool. Despite the case starting under the Trump administration, the Biden administration continued to carry it out as part of a wider effort to proactively defend American intellectual property. Even before the ruling, Commerce Secretary Gina Raimundo reversed her stance on adding further rules to GPU export restrictions just a week after, saying, "we can't let China get these chips, period." It's unclear whether this cooling is temporary or if it will continue to gain momentum.
