A sealed indictment by South Korean authorities has revealed that when former Samsung executive Choi Jinseog won a contract with Taiwan’s Foxconn in 2018, he used his former employer’s supplier network to steal trade secrets to aid his new client in establishing a chip factory in China.
According to Reuters, on June 12, prosecutors announced the indictment. Based on the anticipated expenditures Samsung Electronics (005930.KS) incurred to develop the stolen data, they claimed the theft caused losses to the company of more than $200 million.
Although some media later identified Choi and his connections to Foxconn, the announcement did not name him and provided little specifics.
According to the unpublished 18-page indictment, Choi is accused of stealing trade secrets from Samsung as well as information on the proposed Foxconn plant.
Choi, who has been imprisoned since late May, has rejected all of the charges through his lawyer, Kim Pilsung.
According to the indictment, Foxconn awarded the contract to Choi’s Singapore-based consulting firm Jin Semiconductor sometime in August 2018.
Prosecutors claim that within months, Choi had illegally gained “a large number” of employees from Samsung and its affiliates as well as sensitive knowledge about the development of a chip facility from two contractors.
The allegations made in the indictment were vehemently denied by Choi’s attorney.
“There is no connection between what the prosecution claims was stolen and chip design or production. For instance, there are open, worldwide engineering standards for creating cleanrooms, and Samsung is not the only company that has them,” according to Kim.
According to the indictment, Samsung classifies the kinds of data Choi obtained as “strictly confidential” and protects it with many levels of security, limiting access only to those who are authorized within the company and at its third-party partners.
Choi, 65, was once a rising figure in South Korea’s chip sector. Before departing Samsung in 2001, he spent 17 years there developing DRAM memory chips and working on wafer processing technology. During this time, he also won internal honors for improving the company’s DRAM technology.
The new Foxconn plant was expected to have a monthly capacity of 100,000 wafers using 20-nanometer DRAM memory chip technology, according to the indictment. 20-nanometer DRAM is still regarded by South Korea as a “national core technology” despite being years behind Samsung’s most recent 12- and 14-nanometer technologies.
According to his attorney, Choi, and Foxconn agreed to a preliminary consulting agreement sometime in 2018 to establish the possible chip facility in Xian.
However, the lawyer claimed that barely a year later, Foxconn terminated the agreement and only paid project-related salaries. He cited the sensitivity of the situation in declining to comment on the reason Foxconn terminated the contract or to provide more information.
Along with Choi, six other former and present Jin Semiconductor employees, as well as a Samsung contractor employee, are indicted. According to court documents, the trial is scheduled to start on July 12.
