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China Attempted to Steal Micron Secrets



Corporate espionage is an extremely serious charge in the American technology market. There have been several prominent occasions in which AMD and Intel or AMD and Nvidia have cooperated when an employee was suspected to have engaged in IP theft, precisely because the consequences of bringing a product to market that’s tainted by another company’s IP rights could be so catastrophic. But in China, there’s a very different system in place — and the way this has played out could be driving China’s investigation of Micron and Samsung’s DRAM pricing.

Here’s what we know. Micron alleges that the United Microelectronics Corporation (UMC), a Taiwanese foundry, cooperated with Fujian Jinhua Integrated Circuit Company to steal Micron secrets. Jinhua may have been attempting to steal secrets from Micron in a manner similar to that used by the Yangtze Memory Technology Company, or YMTC, which is now building chips that the New York Times reports look suspiciously like Samsung devices. The Chinese companies are collectively under tremendous pressure to deliver on an initiative China calls “Made in China 2025.” Made in China 2025 is a comprehensive Chinese effort to increase domestic production of core materials by up to 40 percent by 2020 and 70 percent in 2025.

The impact this would have on existing semiconductor manufacturing can only be described as seismic. But there’s no way for Chinese companies to catch US, Korean, and Japanese manufacturing if they cannot compete on foundry nodes. According to the Semiconductor Manufacturing International Corporation, which is based in Shanghai, China, it currently only offers products at the 28nm node. TSMC, in contrast, is currently ramping up 7nm — a full two nodes ahead. And that doesn’t count alternatives like GlobalFoundries FD-SOI technology, which is currently available on 22nm and ramping on 12nm. In short, there are a number of semiconductor companies worldwide with a significant lead on their Chinese counterparts, which may explain why Micron found itself targeted for international corporate espionage.

The New York Times report discusses how Micron, after turning down an acquisition offer, found itself targeted. UMC and Fujian collaborated to lure Micron employees to UMC while taking company secrets with them. The gig was up when, at a recruiting event aimed at Micron employees, UMC and Jinhua used codenames that were only supposed to be known to Micron employees. Legal investigation and a police sting against UMC found clear evidence of theft, but it also led to potentially retaliatory action against Micron from Chinese officials. The company has been counter-sued by UMC and Jinhua — and the court in Fujian province, where the case is being heard, is an investor in Fujian Jinhua Integrated Circuit Company.

Micron is also under investigation for potential collusion and price fixing related to DRAM pricing, a topic we’ve discussed at some length. It’s harder to comment on that issue, given that DRAM prices are much higher than they should be, the companies in question have publicly avowed to avoid competition, and the Chinese appear to be the only ones interested in investigating the situation.

The NYT goes into more details on the sting operation against the Chinese companies and the overall lawsuits, but this is a troubling example of how international corporate espionage continues to be a very real threat, particularly given China’s ambitions in the semiconductor industry.

https://www.geezgo.com/sps/28414
China Attempted to Steal Micron Secrets Reviewed by Chidinma C Amadi on 6:30 PM Rating: 5

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