US accuses China, Taiwan firms with stealing secrets from chip giant Micron

WASHINGTON — US Attorney General Jeff Sessions accused Beijing Thursday of backing a scheme by Chinese and Taiwan companies to steal an estimated $8.75 billion worth of trade secrets from semiconductor giant Micron.

The Justice department unveiled criminal charges against Chinese state-owned Fujian Jinhua Integrated Circuit Co., and United Microelectronics Corporation (UMC) of Taiwan, along with three UMC officials.

It said they conspired to rob US-based Micron's advanced designs to turn Fujian Jinhua into a major player in the global computer chip market.

The charges were the latest in a series of cases targeting what Washington calls an ongoing Beijing program to steal valuable US industrial and commercial secrets in order to advance the Chinese economy.

"Taken together, these cases and many others like them paint a grim picture of a country bent on stealing its way up the ladder of economic development and doing so at American expense," Sessions said.

"This behavior is illegal. It is wrong. It is a threat to our national security. And it must stop."

The indictment released in the US 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.

Those would then be transferred to Fujian Jinhua under an contract set by Chen.

Prior to the plot, US prosecutors said, neither the Chinese nor the Taiwanese company had any DRAM production capability.

But China had set out the goal of acquiring DRAM capability in its current strategic economy plan.

Chen was originally a top executive at Micron's Taiwan operation. He moved in 2015 to lead UMC, a contract chip manufacturer listed on the New York Stock Exchange, and subsequently became president of Fujian Jinhua.

Competitive threat to Micron

The theft  posed a major threat to Micron, a company valued at around $100 billion and which controls 20-25 percent of the global market for DRAM chips.

The indictment came four months after Fujian Jinhua won a patent dispute with Micron in a Chinese court, gaining an order for the US company to stop sales in China of more than a dozen solid-state drives, memory sticks and chips.

In retaliation, the US Commerce Department on Monday placed heavy restrictions on Fujian Jinhua's ability to buy US machinery and materials for its factories that would boost its DRAM production capabilities.

In addition to the criminal charges announced Thursday, the Justice Department filed a civil lawsuit to block imports of any UMC and Fujian Jinhua products using stolen Micron technology.

In recent years Washington has stepped up its fight against China's alleged ongoing economic espionage program against the United States, aiming to obtain all sorts of advanced technologies, from agriculture to heavy manufacturing.

In the past two months the Justice Department has also indicted 12 Chinese, including three intelligence officials, in an alleged five-year plot to steal jet engine technology from major US and French companies who supply the world's airlines.

"China is probably, over the long term, the biggest challenge, national security challenge that faces our country," Secretary of State Mike Pompeo said Wednesday in an interview with Fox News' Laura Ingraham.

"Where the semiconductor piece fits in is, it's part of a mosaic of our strategic effort to push back against this continued Chinese effort."