25 August 2019
US Attorney General Jeff Sessions, flanked by other officials, announces the filing of charges during a news conference at the Justice Department in Washington on Thursday. Photo: Reuters
US Attorney General Jeff Sessions, flanked by other officials, announces the filing of charges during a news conference at the Justice Department in Washington on Thursday. Photo: Reuters

US indicts China, Taiwan firms over Micron trade secrets

The US Justice Department unveiled an indictment against two companies based in China and Taiwan and three individuals, saying they conspired to steal trade secrets from US semiconductor company Micron Technology Inc. relating to its research and development of memory storage devices, Reuters reports.

The charges against Taiwan-based United Microelectronics Corp., China state-owned Fujian Jinhua Integrated Circuit Co. Ltd. and three individuals who once worked for a unit of Micron mark the fourth case brought by the Justice Department since September as part of a broader crackdown against alleged Chinese espionage on US companies.

Thursday’s action is the latest in a long list taken to fight what some in the Trump administration call China’s cheating through intellectual property theft, illegal corporate subsidies and rules hampering US corporations that want to sell their goods in China.

The FBI’s deputy director, David Bowdich, said that nearly every one of the agency’s 56 field offices “has investigations into economic espionage that lead back to the country of China”.

US Attorney General Jeff Sessions told a news conference that Chinese espionage has been “increasing rapidly”, and the government is launching a new initiative to crack down on Chinese espionage trade cases.

The Chinese Embassy in Washington did not immediately comment. United Microelectronics did not immediately respond to a request for comment.

In addition to the criminal case, the Justice Department filed a civil lawsuit seeking to prevent the two accused companies from exporting any products created using the trade secrets and blocking the further transfer of trade secrets.

Micron said in a statement that it “has invested billions of dollars over decades to develop its intellectual property. The actions announced today reinforce that criminal misappropriation will be appropriately addressed.”

The US Commerce Department earlier this week also announced that it had put Fujian Jinhua on a list of entities that cannot buy components, software and technology goods from US firms.

Stock price fears

San Francisco FBI special agent in charge John Bennett, whose counter-intelligence agents led the two-year probe, said China was the largest practitioner of government-backed economic espionage in Silicon Valley, but he noted that some victim companies remained reluctant to come forward to the FBI, for fear of stock price impact or embarrassment.

John Demers, the head of the Justice Department’s National Security Division, said that the multi-pronged approach by the government has “stopped the harm” before it could manifest itself in a competing product.

Democratic Senator Mark Warner, vice chair of the Senate Intelligence Committee, cheered the action, and said the administration should do more to crack down on economic espionage by Chinese businesses and the Chinese government.

Micron filed its own a civil lawsuit against Fujian and United Microelectronics in December 2017 in federal court in California, accusing them of secret infringement of intellectual property related to its DRAM chips after prosecutors in Taiwan charged two Micron employees with stealing trade secrets.

In January, UMC filed a patent infringement lawsuit against Micron in China.

“No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China,” FBI Director Christopher Wray said in a statement.

The indictment alleges that China was interested in gaining access to dynamic random-access memory, or DRAM, a type of technology it did not possess. Micron is the only US-based company that manufactures DRAM.

Sessions said the Taiwanese company partnered with a Chinese state-owned company so that ultimately China could steal this technology from the United States and then use it to compete against the US. “This is a brazen scheme,” Sessions said.

According to charging documents and Justice Department officials, Chen Zhengkun, a former Micron employee who worked in Taiwan, left the company in July 2015 to join United Microelectronics.

Chen, who is one of the three individuals facing criminal charges, then recruited other Micron employees to come and bring trade secrets with them. He also allegedly set up a joint venture with Fujian Jinhua, a China-owned company founded in 2016 for the sole purpose of developing DRAM technology.

Taiwan assisted with the investigation, according to Alex Tse, the US attorney for northern California.

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