After Semiconductor Technology Leakage... The 'Lenient' Industrial Technology Protection Act Under Fire at the National Assembly Audit

Even if Advanced Technology Is Smuggled Abroad,
Maximum Sentence Is Only Half

Discussion Stalls Despite Industry Demands
Concerns Over Lower Priority After October Yoon Administration's First National Audit

Semiconductors Require Skilled Personnel
To Secure High-Level Technology

[Asia Economy Reporter Moon Chae-seok]

#A, the CEO of a partner company who stole advanced semiconductor technology from Samsung Electronics' subsidiary Semes to develop equipment for export to China, was sentenced to 1 year and 6 months in prison in the first trial at the Seoul Central District Court on the 18th of last month. This was because he illegally acquired and utilized advanced technology managed as trade secrets by the victim company, causing a significant risk of financial damage. Despite violating the principles strictly prohibited by the related law, the "Act on the Prevention and Protection of Industrial Technology Leakage (Industrial Technology Protection Act)," A received a punishment amounting to about half of the maximum sentence prescribed by law in the first trial.

#B, an employee of Samsung Electronics' DS (semiconductor) division found in the foundry sector, was caught earlier this year for mass viewing of confidential semiconductor-related materials uploaded on the company's secure server. It was revealed in March. The National Intelligence Service judged that an investigation was necessary regarding the leakage of national core technology and reportedly forwarded the case to the prosecution in April. This is also a case of "illegal acquisition and utilization" prohibited under the Industrial Technology Protection Act.

There are criticisms that insiders of the company, subsidiaries, or partner company affiliates brazenly sold advanced technologies such as semiconductors to foreign countries but only received "lenient" punishments. At the center of this issue lies the Industrial Technology Protection Act, whose revision discussions have been stagnant. It is expected to be a topic of debate in this year's national audit as well. Even related institutions in the National Assembly have stepped forward, firmly stating the need to "consider revising the law."

The industry has demanded the necessity of strengthening punishments through legal amendments but insists that the precedent of sluggish discussions cannot be repeated. This time, they are raising their voices for the political sector to swiftly push forward the revision work. It is pointed out that making only future workforce development plans while neglecting the management of existing personnel is akin to "locking the barn after the horse is lost."

According to the National Assembly and government on the 5th, there is a growing opinion in the political circle that the revision of the Industrial Technology Protection Act should be publicized at the first national audit after the launch of the Yoon Suk-yeol administration in October. On the 2nd, the National Assembly Legislative Research Office stated in its "2022 National Audit Issue Analysis" report that "legislation to protect technology is necessary to prevent the leakage of core semiconductor technology and excellent human resources overseas," and "consideration can be given to revising the Industrial Technology Protection Act and the 'Act on the Prevention of Unfair Competition and Protection of Trade Secrets (Unfair Competition Prevention Act)."

So far, the industry has pointed out that the revision work for the relevant bills has not been concretized. Since the 21st National Assembly opened on May 30, 2020, 12 related bills have been proposed, but one (by lawmaker Go Min-jung) was withdrawn, nine are under review by the relevant standing committee (Industry, Trade, Energy, Small and Medium Enterprises Committee), and two remain at the reception stage.

Among these, the bill that has attracted the most attention is the one introduced on June 7 by Hong Seok-jun, a member of the People Power Party, as the main proposer. This bill specifically strengthens the punishment standards in Article 36, Paragraph 1. Under the current law, those who illegally transfer national core technology abroad face "imprisonment for at least three years and a fine of up to 1.5 billion KRW." Additionally, those who sell industrial technology are subject to "imprisonment for up to 15 years or a fine of up to 1.5 billion KRW."

Hong's bill raises the sentencing standards to "at least 5 years and up to 3 billion KRW" for core technology and "up to 20 years and up to 2 billion KRW" for industrial technology.

Both the political and industrial sectors agree with the purpose of the proposed amendment, but it is uncertain whether this bill will be prioritized among political issues. The industry is concerned that, unlike recent economic-related livelihood bills that passed the National Assembly, such as the "increase of the flexible oil tax rate adjustment limit from 30% to 50%" on the 2nd, this bill may attract limited public attention and thus be relegated to a lower priority.

However, the industry welcomes the fact that there is a political movement to strengthen these regulations. Especially due to cases like China’s Semiconductor Manufacturing International Corporation (SMIC), suspected of successfully replicating Taiwan foundry TSMC’s 7-nanometer fine process technology, there is growing support for a strong revision of the law to check emerging countries like China and protect domestic industries.

An anonymous semiconductor industry official said, "Like all industries, semiconductors are called the 'rice of industry,' and securing high technology requires having the right 'people.' Although discussions on semiconductor workforce development policies are actively underway recently, if existing skilled personnel are not protected, any measures will have limited effectiveness."

This content was produced with the assistance of AI translation services.