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DOJ indicts Chinese company for economic espionage against tech giant Micron

Micron (Deepsonic/Flickr)
November 03, 2018

A state-owned enterprise of the People’s Republic of China, a Taiwan firm, and three individuals were charged with economic espionage and indicted by a federal grand jury on Thursday.

The announcement was made by Attorney General Jeff Sessions, FBI Director Christopher Wray, Assistant Attorney General for National Security John Demers, Assistant Attorney General for the Criminal Division Brian A. Benczkowski, United States Attorney Alex G. Tse of the Northern District of California, and FBI Special Agent in Charge for the San Francisco Field Office John F. Bennett.

Attorney General Sessions said, according to the Justice Department:

I am announcing that a grand jury in San Francisco has returned a multi-defendant indictment alleging economic espionage on the part of a state-owned Chinese company, a Taiwanese company, and three Taiwan individuals for an alleged scheme to steal trade secrets from Micron, an Idaho-based semi-conductor company. Micron is worth an estimated $100 billion and has a 20 to 25 percent share of the dynamic random-access memory industry—a technology not possessed by the Chinese until very recently.  As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly.  I am here to say that enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity.

Sessions added, “One of the individuals charged, Stephen Chen, once served as president of a firm acquired by Micron in 2013 and later moved to the charged Taiwanese firm United Microelectronics Corp., “from where he is alleged to have orchestrated the theft of trade secrets from Micron.”

According to Sessions, Chen then joined forces with the state-owned Chinese firm, Fujian Jinhua Integrated Circuit Co., allowing China to access key data and utilize it for illicit advantage in the marketplace, according to USA Today.

The indictment was filed on Sept. 27, but wasn’t unsealed until Nov. 1.

A civil lawsuit was also filed yesterday to ban all stolen trade secrets moving forward, as well as the exportation of any products from the U.S. manufactured by UMC or Jinhua using the trade secrets.

U.S. Attorney Alex Tse said, “The theft of intellectual property is not only unfair but stifles technological innovation by disincentivizing investment in long-term research and development. The theft of intellectual property on a continuing basis by nation-state actors is an even more damaging affront to the rule of law. We in the Northern District of California, one of the world’s great centers of intellectual property development, will continue to lead the fight to protect U.S. innovation from criminal misappropriation, whether motivated by personal greed or national economic ambition.”

FBI Director Christopher Wray said:

No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China. The Chinese government is determined to acquire American technology, and they’re willing use a variety of means to do that – from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information.  If China acquires an American company’s most important technology – the very technology that makes it the leader in a field – that company will suffer severe losses, and our national security could even be impacted.  We are committed to continuing to work closely with our federal, state, local, and private sector partners to counter this threat from China.

The indictment states that the defendants conspired to intentionally steal Micron Technology, Inc’s trade secrets, which include advanced research, development, and manufacturing of memory products, including dynamic random-access memory (DRAM).

Micron is the only United States-based company that manufactures DRAM, which is the leading-edge memory storage device used in computer electronics.

The People’s Republic of China did not utilize DRAM technology before the conspiracy by the alleged defendants. However, the Central Government and State Council of the PRC publicly acknowledged the development of DRAM and other microelectronics technology as a national economic priority.

The criminal defendants are United Microelectronics Corporation (“UMC”), a Taiwan semiconductor foundry; Fujian Jinhua Integrated Circuit, Co., Ltd. (“Jinhua’”), a state-owned enterprise of the PRC; and three Taiwan nationals: Chen Zhengkun, a.k.a. Stephen Chen, age 55; He Jianting, a.k.a. J.T. Ho, age 42; and Wang Yungming, a.k.a. Kenny Wang, age 44.

If convicted, the individual defendants face a maximum sentence of 15 years imprisonment and a $5,000,000 fine for economic espionage charges, and 10 years imprisonment for theft of trade secrets charges.

If convicted, each company faces forfeiture and a maximum fine of more than $20 billion.