Tech war: South Korea on alert for technology leaks to China as US restrictions intensify
- The tech leakage fears come amid Washington’s calls for South Korea and other allies to help restrain China’s ability to develop advanced semiconductor technology
- Between 2016 and 2021, a total of 112 foreign intellectual property theft cases were reported in South Korea, with 36 related to ‘core national technology’
South Korea is on the alert for potential know-how leaks to China, as US efforts to deny Chinese access to chip technologies intensifies, according to Korean experts, in a subtle shift that could cast a shadow over semiconductor supply chain cooperation between the two Asian neighbours.
In the latest intellectual property (IP) theft case, the Suwon District Prosecutor’s Office last month accused five suspects, including a researcher from SEMES Co, of sending confidential information related to semiconductor cleaning equipment to China.
China-Korea semiconductor trade starts to crack under US pressure
Son Seung-woo, president of the Korea Institute of Intellectual Property, said China is seeking alternative routes to acquire semiconductor technology, such as mergers and acquisition of overseas assets and the poaching of foreign talent – on top of indigenous innovation – amid the tightening US restrictions.
“China is working on advancing its industries, and is attempting to acquire technologies from other countries with more advanced levels,” Son said. “Washington’s chip control measures on China caused a shortage of [advanced] semiconductors, which pushed Beijing to seek South Korean chip technology.”
The Chinese government has always denied industrial espionage allegations.
When a separate IP theft case involving SEMES was first reported in May 2022, Chinese state media The Global Times linked it to the then visit to Seoul by US President Joe Biden, adding that the case was a sign of Seoul’s mistrust of China. Zhan Debin, a Korean affairs researcher with the Shanghai University of International Business and Economics, was quoted by the newspaper as saying Korea was set to tighten oversight of overseas technology transfers anyway, regardless of efforts to target China.
Seoul has designated 71 “core national technologies”, which include semiconductors, displays, and secondary cells, with anyone caught leaking such technology to a foreign country liable for more than three years in prison under South Korean criminal law.
Between 2016 and 2021, a total of 112 foreign IP theft cases were reported in South Korea, with 36 related to “core national technology”.
“South Korea relied on hi-tech product exports to China, but it saw a trade deficit with China for the first time last year,” said Son from the Korea Institute of Intellectual Property. “It means China’s technology has improved significantly.”
As a result, Seoul is on alert for the leakage of advanced technologies to China that could undermine the country’s competitiveness in the international semiconductor market, according to Park Ki-soon, a senior adviser for Dentons Lee Law Firm.
“If China obtains those technologies, South Korea will lose the China market in those products,” said Park, who also studies Chinese economy. “The Chinese companies that acquired those technologies would have more competitiveness in the industry, encroaching on South Korean firms’ share in the global market.”
One way China has acquired chip technology over the years is through poaching of engineers from rivals. For example, China’s advances in DRAM chip technology in recent years were aided by Japanese, Taiwanese and South Korean engineers who were enticed to mainland China with generous salary packages and benefits.
“It’s all about money,” said Choo Jae-woo, professor of China studies at Kyung Hee University in Seoul. “South Korean companies need to do well in offering job security and better treatment of their employees to prevent these leaks.”
South Korea’s global chip exports reached US$6 billion in January, down 44.5 per cent from the same period last year, according to the South Korean Ministry of Trade, Industry, and Energy. The country’s chip exports to China fell by 46.6 per cent in January.
