Taiwan's UMC pleads guilty of trade secret theft

Taiwan's UMC pleads guilty of trade secret theft

Taiwanese contract chipmaker United Microelectronics Corporation has pleaded guilty to US criminal charges for theft of trade secrets and has been fined $ 60 million, the second largest penalty for such cases.

The case was brought before US courts against the backdrop of heightened tensions between Washington and Beijing under the presidency of Donald Trump. These attitudes have worsened among both Republicans and Democrats.

UMC escaped more serious charges in exchange for cooperating against Chinese memory chip maker Fujian Jinhua, whose co-defendant in this case, according to the US Department of Justice.

"UMC's guilty plea suggests a trial of Fujian Jinhua in 2021," said David Anderson, an American attorney for the northern district of California.

In November 2018, the US authorities accused both companies of stealing trade secrets from Micron Technology, the American manufacturer of memory chips. Washington also added Fujian Jinhua to its export control list of companies identified as threats to national security. This cut off the Chinese chipmaker's vital supplies of US equipment and forced it to cease operations last year.

The dispute started a few years earlier. According to Taiwanese court documents, two engineers from Rexchip, a Taiwanese memory chip company that bought Micron in 2013, joined UMC in 2015. A year later, UMC signed a cooperation agreement with Fujian Jinhua, which included the support of the Taiwanese chip maker. The Chinese company is increasing production.

As part of its plea, UMC admitted it had hired three Micron employees from the US company's Taiwanese subsidiary, two of whom allegedly brought confidential Micron information to UMC. The people were working on a chip manufacturing contract that UMC had signed with Fujian.

The case has drawn attention to the risk of technology loss by Taiwanese companies, which dominate global contract manufacturing of semiconductors and electronic devices for Western brands, but are also heavily dependent on China. As part of its efforts to "decouple" global supply chains from China, Washington is pushing Taiwanese tech companies to side with the West and reducing their ties with China.

"UMC stole the trade secrets of an American leader in computer storage so that China can achieve a strategic priority: self-sufficiency in the production of computer storage without spending its own time or money," said Jeffrey Rosen, US assistant attorney. General.

UMC said the US Department of Justice agreed to drop conspiracy charges to commit industrial espionage and intellectual property theft conspiracy under the settlement agreement.

In a statement on the Taiwan Stock Exchange Thursday morning, the company said that its employees had transferred Micron technology to Jinhua in violation of their employment contract. "UMC never went ahead and did not transmit unauthorized information to Jinhua," it said. “According to the US Trade Secrets Act, however, the company bears legal responsibility for the actions of employees even if employees violate company guidelines without the knowledge of management. Therefore UMC admitted and took responsibility for the violations of the law by the employees in the settlement agreement. "

UMC's negotiations on the deal announced on Wednesday evening in the United States have pushed the company's share price up for months. Shares on the Taiwan Stock Exchange rose 0.8 percent Thursday morning, the day after the close of trading at NT $ 35.50 ($ 1.24), their highest level in more than a decade.

Fujian Jinhua did not immediately respond to a request for comment.

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