USA charges China-controlled company in trade secrets theft

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China's rampant theft of US intellectual property is at the core of an ongoing trade dispute between the two nations.

The US justice department has indicted three individuals and two companies based in China and Taiwan for allegedly stealing a US company's trade secrets. "We are here today to say, 'enough is enough.' We're not going to take it anymore", said Attorney General Jeff Sessions at a press conference.

The indictment released in the U.S. district court in San Jose, California alleges that three former Micron employees in Taiwan - Stephen Chen Zhengkun, He Jianting and Kenny Wang Yungming - joined UMC in 2015 and 2016 with the express plan to hand over to the company Micron's design and manufacturing processes for specific dynamic random access memory (DRAM) semiconductors.

In August 2017, Taiwan authorities filed criminal indictments against UMC and three of its employees for the alleged theft and use of trade secrets from Micron, for the objective of developing DRAM chip manufacturing technologies in cooperation with Jinhua.

UMC then teamed up with Fujian Jinhua "so that ultimately, China could steal this technology from the United States and then use it to compete against us in the market", Sessions said.

"We appreciate the US Department of Justice's decision to prosecute the criminal theft of our intellectual property", senior VP and general counsel Joel Poppen said of the indictments.

"Obviously, that commitment has not been met", he said.

Idaho-based Micron estimated to be worth $100 billion, controls about 20 to 25 per cent of the dynamic random-access memory (DRAM) industry, a technology not possessed by the Chinese until very recently.

The trade secrets at stake are valued at up to US$8.75 billion, according to the indictment. China has retaliated with tariff increases on $110 billion of American products.

Congress in August passed the Foreign Investment Risk Review Modernization Act to expand the government's power to review investments from foreign countries - a response to China's efforts to obtain US technology through mergers, acquisitions and takeovers.

United Microelectronics issued a response saying the allegations in the indictment and complaint are "virtually the same as allegations in a civil complaint previously filed against UMC by Micron". While there, he arranged an agreement between UMC and Jinhua in which UMC would transfer DRAM technology to Jinhua to mass-produce, and the technology would be jointly shared by the companies. A group of USA attorneys and an Federal Bureau of Investigation representative will "identify priority Chinese trade theft cases, ensure that we have enough resources dedicated to them, and make sure that we bring them to an appropriate conclusion quickly and effectively", Sessions said.

"UMC regrets that the U.S. Attorney's Office brought these charges without first notifying UMC and giving it an opportunity to discuss the matter", the company said.

The moves are part of a growing U.S crackdown on alleged Chinese economic espionage done through hacking and other means.

FBI Director Christopher Wray said China poses the most significant threat to the United States.

"We see it time and again: Chinese actors have stolen wind turbine technology in Wisconsin, agricultural research in Kansas, cancer drug research in Pennsylvania, and software source code in NY", said Assistant Attorney General Brian A. Benczkowski in prepared remarks at the announcement. "This is part of a much broader whole-of-government approach to countering China's efforts to gain strategic advantage, particularly in emerging technology".

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