Red Notice

Red Notice
​

Samsung (005930.KS), as the leader in both OLED display and semiconductor memory production, is the envy of competitors and the object of those wishing to take a shortcut to success by stealing sensitive information from the company.  Most recently three former Samsung employees were indicted in South Korea for leaking Samsung’s DRAM manufacturing process to Chinese semiconductor memory producer ChangXin Memory Technologies (pvt), China’s largest domestic DRAM producer.  We note that Changxin is a state controlled entity with the Hefei Industrial Investment Fund and the National Integrated Circuit Industry Investment Fund (aka ‘The Big Fund’)[1] as the largest shareholders.
The indictment indicates that the employees were recruited by CXMT to join a team that was verifying and testing DRAM manufacturing processes and were promised salaries that were up to 5 times higher than what they were earning, up to $2.14m/year according to the court documents.  The processes they were testing were allegedly stolen from Samsung by the Samsung employees and passed on to CXMT. 
This is not something new for Samsung, despite its numerous precautionary measures, which include HDAs and non-competes, no data transferred to flash drives, strict physical access control, the disabling of smartphones upon entry to all Samsung facilities, and most recently a limit of prompt size to 1024 characters for AI (after an accidental leak through ChatGPT (pvt).  Here are a few other Samsung breeches.

• 9/2024             Two Samsung execs accused of stealing 20nm DRAM technology and setting up a company in China with the data – Value $3.2b
• 7/2024             Samsung Display engineer convicted of stealing optical system plans for laser annealing and OCR tech to set up competing company – Value $24.5m
• 6/2023             Samsung exec and 6 employees accused of stealing factory blueprints and clean room designs. Attempted to duplicate the factory in Xian, China – Value $233m
• 2/2023             Seven employees of SEMES (pvt), a Samsung equipment affiliate, stole blueprints and component lists for a semiconductor cleaning tool.  Formed company and sold 14 units to Chinese customers – Value $60m
• 11/2021           Samsung researcher photographed 17 automated factory operation and digital display IP documents with a phone – Value $180m
• 11/2018           Executives of Toptec (108230.KS), a Samsung supplier, sold 3D lamination tech for flexible OLED displays to a Chinese company – Value $134m

What makes the most recent breech interesting is that CMXT announced in 2023 that it had become the first Chinese semiconductor company to produce 18nm DRAM, which was seen as a big step forward for the Chinese semiconductor industry.  The prosecutors in the current case, which originally took place in 2018, allege that CXMT’s technology announcement was not based on their own development but the DRAM process that was stolen from Samsung,  It’s hard to prove such an allegation without hard data from CXMT, which might be difficult to come by, but be on the lookout for a former employee of Samsung named Park, currently the subject of an Interpol Red Notice, who was suspected of copying hundreds of Samsung’s DRAM process steps for CXMT.


[1] ‘The Big Fund’  is a mandatory investor in all strategically important Chinese semiconductor projects.  It is financed and controlled by the central government.