Samsung engineer sentenced to 7 years in prison for selling chipmaking trade secrets to Chinese chipmaker — ex-employee supplied 10nm DRAM data to CXMT for $2 million

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The court deemed the accused shared information on "core national technology" that caused South Korea potentially trillions in losses — since leaking it gave a head start to CXMT, which consequently ended up debuting 10nm-class HBM2 memory much earlier than expected. Interestingly, the court did consider Jeon's low compensation at Samsung at the time of the crime, calling it a "mitigating factor" when presenting the final sentence.

Estimates put Samsung's R&D costs for 10nm DRAM at around 1.6 trillion KRW ($1.08 billion), spread across five years. Jeon left Samsung to work for CXMT around this time, and was thought to have shared chipmaking secrets via handwritten notes. CXMT was manufacturing 17nm DRAM in 2022 and jumped to 10nm in 2023 — a huge improvement for a fab with otherwise limited access to cutting-edge lithography tools.

The prosecution argued Samsung's stolen IP contributed to CXMT's abrupt growth. This alone would have been enough for an indictment, but the opportunity cost of lost sales (customers opting for CXMT over Samsung) was the final nail in the coffin. Moreover, Jeon received 2.9 billion KRW ($2 million) in exchange for the information he shared with the Chinese company, as well as stock options and other contract incentives.

Recently, HP was reported to be considering Chinese companies to supply memory amidst the growing component shortage. Asus and Dell are also interested in delegating some of their memory needs to China, since the major DRAM manufacturers are all laser-focused on making HBM for AI accelerators. CXMT is part of the "Section 1260H" list of foreign companies suspected of aiding the Chinese military, but it's not banned in the U.S. yet.