Former Micron Technology employees charged with economic espionage

The U.S. Justice Department announced Thursday that a federal grand jury in San Francisco has indicted a government-owned Chinese company, a private Taiwanese company and three Taiwanese citizens on charges of stealing trade secrets from an American semiconductor company.

The three individuals once worked for Idaho-based Micron Technology Inc. and then were hired by United Microelectronics Corp., known as UMC, of Taiwan.

They allegedly gave trade secrets from Micron concerning dynamic random access memory, or DRAM, to United Microelectronics, which in turn allegedly gave them to Fujian Jinhua Integrated Circuit Co. Ltd. of the People’s Republic of China for manufacturing.

U.S. Attorney General Jeff Sessions said at a news conference in Washington, D.C.:

“As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing — and it has been increasing rapidly … Enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity.”

All five defendants are accused of conspiracy to commit espionage, conspiracy to steal trade secrets and carrying out economic espionage. The allegedly stolen secrets were worth between $400 million and $8.75 billion to the two companies in saved research costs, according to the indictment.

The indictment was filed on Sept. 27 and unsealed on Wednesday. Thursday, the Justice Department also filed a related civil lawsuit against the two companies and defendant Chen Zhengkun in federal court in San Jose, seeking an injunction prohibiting them from exporting any DRAM products into the United States.

Micron is the only U.S. company that manufactures DRAM and it provides 20 to 25 percent of the world’s supply, according to the indictment. It has offices in a number of U.S. and international locations, including a Milpitas office that is slated to move next year to a new campus for 1,000 workers in San Jose.

Micron General Counsel Joel Poppen said in a statement:

“We appreciate the U.S. Department of Justice’s decision to prosecute the criminal theft of our intellectual property. Micron has invested billions of dollars over decades to develop its intellectual property.”

The indictment says that United Microelectronics and Jinhua reached an agreement in January 2016 in which the Taiwanese company would provide DRAM research and development and Jinhua would provide manufacturing facilities.

Chen Zhengkun, also known as Stephen Chen, 55, formerly headed a Micron subsidiary in Taiwan, joined United Microelectronics in July 2015 and helped negotiate that company’s agreement with Jinhua, according to the indictment.

The indictment alleges that he recruited He Jianting, also known as J.T. Ho, 42, and Wang Yungming, also known as Kenny Wang, 44, from Micron in 2015 and 2016, and that both brought stolen secrets with them.

In addition to the conspiracy and espionage counts, He Jianting is charged with a count of theft of trade secrets. The indictment alleges that as part of the conspiracy, he downloaded more than 900 confidential files from Micron before he left the company.

United Microelectronics said in a statement that the criminal charges are “virtually the same” as allegations in a civil lawsuit filed by Micron against the two companies in federal court in San Francisco last year.

UMC said:

“UMC regrets that the U.S. Attorney’s Office brought these charges without first notifying UMC and giving it an opportunity to discuss the matter … UMC takes seriously any allegation that it may have violated any laws and fully intends to respond to these allegations accordingly.”

The charges each carry possible maximum sentences of 10 to 15 years if the individual defendants are convicted. The two companies each face a possible maximum fine of $20 billion if convicted, according to U.S. Attorney’s Office spokesman Abraham Simmons.

All five defendants have been summoned to appear before a federal magistrate in San Jose on Nov. 19. Simmons said the Justice Department “fully expects them all to comply with the court summons,” but said he could not comment on the location of the three individuals or on whether an extradition proceeding is needed.

The trial judge assigned to the case is U.S. District Judge Maxine Chesney, who is also the judge in the civil case filed by Micron.

He, Wang and United Microelectronics were previously indicted by prosecutors in Taiwan last year on charges of stealing trade secrets, according to U.S. prosecution filings.