A court case involving leakage of intellectual property (IP) from a South Korean company to China has shed light on growing tensions in the semiconductor supply chain between the two countries.
The Korean Intellectual Property Office and the Daejeon District Prosecutors’ Office last week announced that six people, who were not identified, will stand trial for leaking core chip manufacturing technology to China. The Chinese parties involved in the case were also not identified.
According to a report by South Korean newspaper The Dong-A Ilbo, citing information from Korean prosecutors, the key suspect (identified only as “A”) was accused of stealing confidential data from his Korean employer. He uploaded the data, which included trade secrets involving chemical mechanical polishing (CMP) technology, to a Chinese company.
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Other suspects include A’s former colleague, as well as former and current employees and researchers from Korean semiconductor conglomerates and their partners, according to a report by South Korean television network Korean Broadcasting System.
There were no Chinese media reports about the case.
CMP is an important final step in the manufacture of silicon wafers, where a polishing pad and slurry are used to remove irregularities on the surface of the wafer. China has a “low rate of local production” in CMP technology, according to a report by Chinese research institute Reportrc.com.
California-based Applied Materials, one of the world’s biggest suppliers of semiconductor manufacturing equipment – including CMP wafer polishers – derived nearly one third of its 2022 revenue from the mainland Chinese market.
The alleged IP theft case comes amid uneasy supply chain ties between China and Korea in semiconductors. Beijing is rolling out the red carpet for Korean chip giants such as Samsung Electronics and SK Hynix to build wafer fabrication plants in China, while Seoul is under pressure from Washington to join the Chip 4 Alliance with the US, Japan and Taiwan. The alliance aims to exclude China from semiconductor supply chains.
South Korea has been “substantially adjusting” its investments in China over the past three years, said Chen Jia, a research fellow with the International Monetary Institute, a think tank at Renmin University of China.
Chip supply chains in South Korea and Japan have been “working hard to hedge against the impact of adjustments in relations between major [geopolitical] powers”, said Chen. “In the Chip 4 Alliance, South Korea acts as the party that most firmly supports China’s semiconductor industry chain, while Japan has undergone a major shift in its stance under pressure from the US.”
Meanwhile, geopolitical issues, including China’s recent temporary suspension of entry visas to Korean citizens and the agreement by Japan and the Netherlands to support US trade restrictions on China, have thrown a “question mark” over the stability of the China-South Korea chip supply chain, Chen added.
China is the largest importer of chips made by Korean companies like Samsung and SK Hynix, which have wafer fabrication plants on the mainland.
More from South China Morning Post:
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