SKorean, US firms embroiled in chip espionage case

Feb 04, 2010 By KELLY OLSEN , AP Business Writer
In this photo taken Wednesday, Feb. 3, 2010, Byun Chan-woo, right, a public prosecutor, briefs their investigation about memory chips at district prosecutors' office in Seoul, South Korea, Thursday, Feb. 4, 2010. The world's top producers of computer memory chips are embroiled in an apparent case of industrial espionage after South Korean prosecutors indicted 18 people over alleged technology theft. Prosecutors said those involved, including employees of U.S. company Allied Materials and its South Korean unit, are suspected of leaking semiconductor technology belonging to South Korea's Samsung Electronics Co. to its domestic rival Hynix Semiconductor Inc. (AP Photo/Shin Jun-hee, Yonhap)

(AP) -- The world's top producers of computer memory chips are embroiled in an apparent case of industrial espionage after South Korean prosecutors indicted 18 people over alleged technology theft.

Prosecutors said Thursday those involved - including employees of U.S. company Allied Materials and its South Korean unit - are suspected of leaking semiconductor technology belonging to South Korea's Co. to its domestic rival Hynix Semiconductor Inc.

The case highlights the intense competition among chipmakers and other sellers of high tech products, who frequently sue each other over alleged patent infringements.

Samsung and Hynix are the world's top two producers of , or DRAM, chips, used mostly in personal computers. Suwon, South Korea-based Samsung is also the world's biggest manufacturer of NAND flash chips, used in digital devices such as cameras, music players and smartphones. Hynix ranks No. 3 in NAND, behind Samsung and Japan's Corp.

Prosecutors indicted 18 people on Wednesday, though 14 were not physically detained ahead of trial, said Kim Yeong-cheol, a prosecutor handling the case. He said prosecutors were also seeking a former Samsung employee for questioning.

The technology is believed to have been obtained by employees of the South Korean arm of Applied Materials Inc., a U.S. company that makes equipment for including Samsung, and then passed on to Hynix, according to prosecutors.

The local operation of Applied Materials had access to Samsung's "core technology" through installing and maintaining the company's chip manufacturing equipment, prosecutors said in a statement Wednesday.

Indicted and being held were one employee each from Samsung and Hynix, the former head of the South Korean arm of Applied Materials - who currently serves as a vice president of the U.S. company - and one of the South Korean unit's current employees, prosecutors said.

Kim, the prosecutor, said no decision has been made whether to seek extradition of a former Samsung employee who is working for Applied Materials in the United States. That person is suspected of leaking Samsung technology to Applied's South Korean arm, Kim said.

Santa Clara, California-based Applied Materials said it was aware of the actions by prosecutors and confirmed that its vice president and some employees of Applied Materials Korea were indicted and detained.

"Applied believes that there are meritorious defenses to the charges and is taking appropriate measures to address this matter," the company said in a filing to the U.S. Securities and Exchange Commission on Wednesday.

"Applied has strict policies in place to protect the intellectual property of its customers, suppliers, competitors and other third parties, and takes any violation of these policies seriously," the company said.

Samsung, meanwhile, said it was concerned over the case and Hynix expressed "great regret."

"We are very concerned by this transgression as it is likely to damage the semiconductor market," Samsung spokeswoman Lee Soo-jeong said. "We plan to take appropriate measures."

She said she could not confirm whether a Samsung employee had been arrested.

"Hynix expresses its great regret that our employees have gotten involved in this case," said spokeswoman Park Seong-ae. "We expect that the facts of the case shall be strictly investigated and clearly revealed."

Park confirmed the arrest of a Hynix executive in the case, but did not elaborate.

Samsung's stock price fell 0.1 percent to close Thursday at 776,000 won. Hynix shares rose 2.1 percent to 21,750 won.

Shares in Applied Materials closed down 1.8 percent at $12.28 Wednesday on the Nasdaq exchange.

Explore further: Amazon loss widens despite climbing sales

4.5 /5 (2 votes)
add to favorites email to friend print save as pdf

Related Stories

Samsung expects strong 3rd-quarter profit

Oct 06, 2009

(AP) -- Samsung Electronics Co. said Tuesday that profit likely surged in the third quarter on higher sales, amid a brightening outlook for the world's largest manufacturer of computer memory chips and flat ...

Korean DRAM finds itself shut out of Japan

Jan 27, 2006

Japan may claim that the countervailing duty it slaps against Korean DRAM chip maker Hynix from today is just a protest against unfair trade practices and to curb dumping, but there's a widespread belief that the country ...

Samsung fined $300M for conspiracy

Oct 14, 2005

Samsung Electronics was found guilty by the U.S. Department of Justice Thursday for conspiring to set prices on computer chips and fined $300 million.

SKorea clears chipmakers of cartel charges

Apr 20, 2009

South Korea's anti-trust watchdog said Monday it has found no evidence that leading chipmakers in South Korea and other countries colluded to fix prices.

Recommended for you

Nokia profits rise after sale of handset division

15 hours ago

(AP)—Telecommunications and wireless equipment maker Nokia Corp. saw its shares surge on Thursday after it reported higher profits and an improved earnings outlook in the wake of its sale to Microsoft of its troubled handset ...

Swiss drug maker Roche posts 7 percent profit drop

18 hours ago

(AP)—Swiss drugmaker Roche Holding AG on Thursday posted a net profit drop of 7 percent compared with a year ago, weighed down by a strong Swiss franc and charges from one of its diagnostic units.

Cheaper wireless plans cut into AT&T 2Q profit

Jul 23, 2014

(AP)—AT&T Inc. on Wednesday posted lower net income for the latest quarter due to cheaper cellphone plans it introduced as a response to aggressive pricing from smaller competitor T-Mobile US.

User comments : 0