US charges China-controlled company in trade secrets theft


Chinese company charged with stealing trade secrets from US chipmaker

It came as Sessions also announced a new Justice Department initiative to combat Chinese economic espionage.

U.S. Attorney General Jeff Sessions told a news conference that Chinese espionage has been "increasing rapidly", and the government is launching a new initiative to crack down on Chinese espionage trade cases. The Justice Department will select five US attorneys to be part of the initiative.

The Justice Department has charged a Chinese firm controlled by its government with the theft of semiconductor technology trade secrets worth almost $9 billion.

Micron filed its own a civil lawsuit against Fujian and United Microelectronics in December 2017 in federal court in California, accusing them of secret infringement of intellectual property related to its DRAM chips after prosecutors in Taiwan charged two Micron employees with stealing trade secrets.

The administration has imposed $200 billion in tariffs on Chinese products and is holding out an additional $250 billion in tariffs.

"We are going to do everything we can to prevent the further dissemination of the unlawful stolen property", he said.

But it's this Chinese government's interference to protect its investments as part of its Made in China 2025 economic plan that got United States authorities to act, first through an export ban, and now through today's charges.

The charges allege that Stephen Chen, who was president of Micron Memory Taiwan (MMT; formerly Rexchip which Micron acquired in 2013), took trade secrets when he became senior vice president of United Microelectronics Corporation (UMC) in 2015 and then conspired with Chinese-backed Fujian Jinhua Integrated Circuit (Jinhua) in January of 2016. While the focus has been on hackers from Russian Federation and Iran, the USA also views China as a major cybersecurity threat.

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Jinhua is funded by the Chinese government and was created in February 2016 for the goal of designing, developing, and manufacturing DRAM, the Justice Department said. "We see it time and again, they have stolen wind turbine technology in Wisconsin, agricultural research in Kansas, cancer drug research in Pennsylvania, and software source code in NY". 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. Two other former MMT staff, He Jianting, also known as J. T. Ho, and Wang Yungming, also known as Kenny Wang.

The indictment charged that the Chinese operation involved the downloading of over 900 Micron confidential and proprietary files that were stolen.

Congress in August passed laws to expand the government's power to review foreign investments in the country.

The administration has characterized China, along with Russian Federation, as a strategic competitor of the United States. "Today, we see Chinese espionage not just taking place against traditional targets like our defense and intelligence agencies, but against targets like research labs and universities".

The attorney general said the problems posed by the Chinese government must be solved.

Almost all of the FBI's field offices across the country "have investigations into economic espionage that lead back to the country of China", FBI Deputy Director David Bowdich told reporters. "The Chinese government is determined to acquire American technology, and they're willing to use a variety of means to do that". On Tuesday, the Justice Department also announced charges against two Chinese intelligence officers and a team of hackers for stealing sensitive commercial aviation secrets and data.

Full details on the case are available from the indictment (PDF warning).

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