Former Samsung Executive Indicted Over Alleged Company Data Theft to Build Chip Factory in China

South Korean prosecutors said they indicted a former Samsung Electronics executive on Monday on suspicion of stealing the company's technology to build a chip factory in China.

The defendant, who also formerly worked at SK Hynix as a vice president, is accused of illegally acquiring Samsung data to build a factory in the Chinese city of Xian between 2018 and 2019, the Suwon District Prosecutors' Office said in a statement.

The trial date was yet to be confirmed by the local court where the indictment has been filed.

The defendant, arrested last month, is denying the allegations, a prosecutor said.

He worked a combined 28 years at the South Korean chipmakers, prosecutors said. The officials did not identify the accused.

Reuters was not immediately able to reach him for comment.

The former Samsung executive allegedly tried to build the factory 1.5 km (1 mile) away from Samsung's chip manufacturing facility in Xian after setting up a semiconductor company, prosecutors said.

The attempt to build the new plant using Samsung data, however, ended in failure due to funding issues, a prosecutor said.

Prosecutors said they have also indicted six other people for their involvement in the alleged crime, including an inspection company employee who is accused of leaking the architectural plan of Samsung's semiconductor factory.

Prosecutors said they estimated the theft of the data to have inflicted at least KRW 300 billion ($233 million or roughly Rs. 1,920 crore) worth of losses on Samsung Electronics.

"It's a grave crime that could deal a heavy blow to our economic security by shaking the foundation of the domestic chip industry at a time of intensifying competition in chip manufacturing," the prosecutors' office said.

Samsung Electronics and SK Hynix declined to comment.

The indictment comes as South Korea has vowed to step up support for its chip sector.

South Korean President Yoon Suk Yeol has described competition in the industry as an "all-out war" amid heightened Sino-U.S. tensions.

South Korea's Samsung and SK Hynix, the world's top two makers of memory chips, have invested billions of dollars in chip factories in China.

($1 = 1,287.7700 won) (This story has been corrected to change the estimated amount of losses to 300 billion won from 30 billion won in paragraph 10)

© Thomson Reuters 2023