Economic espionage, a $9bn PDF, and a US goverment indictment… who says PC memory is boring?

Micron memory fabrication - courtesy of Micron

The US government is cracking down on Fujian Jinhua Integrated Circuit Company – a Chinese DRAM manufacturer that allegedly stole Micron trade secrets worth $9 billion. The Department of Commerce has outright banned US companies from supplying the memory manufacturer with any goods, and, if that wasn’t bad enough, both Jinhua and its DRAM partner UMC have also been formally indicted by the US Department of Justice, too.

The US government believes the Chinese integrated circuit company “poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States”. What it all boils down to is a suspicion that the company stole top secret plans and technologies from US-based semiconductor manufacturer Micron.

Jinhua was involved in an R&D project alongside UMC, the Taiwan United Microelectronics Corp., that began back in May 2016 – supposedly just after the time when Micron’s plans were illegally acquired. The plan was to co-produce DRAM chips at a fab in Jinjiang City, the result of nearly $5.7 billion of investment funding, that is nearing its completion.

That cooperative partnership between Jinhua and UMC has come to an end now that Jinhua can no longer purchase any necessary equipment from the United States. That includes everything from PCs to the machinery actually capable of producing integrated circuits.

UMC Fab8E

UMC is similarly involved in an investigation into stealing secrets from Micron, with the Department of Justice filing an indictment against Jinhua, UMC, and three Taiwanese nationals.

Some 900 files were allegedly stolen by the ex-Micron employees from the US-based company – supposedly including a 233-page PDF on how to produce 25nm DRAM. These were handed to UMC, turbocharging the partnership’s DRAM production, and the documents are now said to be worth up to $9 billion dollars.

To further rub salt in the wound, the indictment claims UMC and Jinhua later attempted to patent the technologies it had allegedly stolen from Micron.

“The allegations in the indictment and complaint are virtually the same as allegations in a civil complaint previously filed against UMC by Micron,” UMC says in a message to the Taiwanese stock exchange. “UMC regrets that the US Attorney’s Office brought these charges without first notifying UMC and giving it an opportunity to discuss the matter.”

This continuing feud between Micron and UMC recently resulted in Micron being banned from selling its products in China. This was largely seen as a retaliatory measure against Micron’s efforts to “aggressively protect” trade secrets.

If the US DoJ indictment plays out against UMC and Jinhua, the company would face charges of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and economic espionage. The result would be serious fines, potentially great enough to wipe a company out of existence.

The fines would cover compensation – up to three times the value of the trade secret – and expenses for R&D equal to that which the company avoided via the alleged misuse of trade secrets. As for the individual ex-Micron employees, they could also face up to 15 years imprisonment and significant financial penalties if found guilty.