The Justice Department on Thursday announced that a federal grand jury indicted a Chinese state-owned company, a Taiwanese company and three Taiwanese nationals with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of Micron, an American semiconductor company, on behalf of the Chinese government.
“I am announcing that a grand jury in San Francisco has returned a multi-defendant indictment alleging economic espionage on the part of a state-owned Chinese company, a Taiwanese company, and three Taiwan individuals for an alleged scheme to steal trade secrets from Micron, an Idaho-based semi-conductor company,” said Attorney General Sessions.
China and the United States are locked in an escalating trade conflict, and both countries have imposed tariffs on hundreds of billions of dollars of each other’s goods. Prior to the events described in the indictment, China did not possess DRAM technology, and the Central Government and State Council of the PRC publicly identified the development of DRAM and other microelectronics technology as a national economic priority, according to the Justice Department.
One of the criminal defendants is Fujian Jinhua Integrated Circuit, Co., Ltd., which the Justice Department describes as a “state-owned enterprise” of China. On Monday, the Department of Commerce announced that it has added the Chinese firm to the Entity List, effectively restricting exports to it.
“When a foreign company engages in activity contrary to our national security interests, we will take strong action to protect our national security,” Secretary of Commerce Wilbur Ross had said in a prepared statement.
“Placing Jinhua on the Entity List will limit its ability to threaten the supply chain for essential components in our military systems,” he added.
According to the indictment, the defendants were engaged in a conspiracy to steal the trade secrets of Micron Technology, Inc., a leader in the global semiconductor industry specializing in the advanced research, development, and manufacturing of memory products, including dynamic random-access memory (DRAM).
DRAM is a leading-edge memory storage device used in computer electronics. Micron is the only United States-based company that manufactures DRAM. According to the indictment, Micron maintains a significant competitive advantage in this field due in large part from its intellectual property, including its trade secrets that include detailed, confidential information pertaining to the design, development, and manufacturing of advanced DRAM products.
“Micron is worth an estimated $100 billion and has a 20 to 25 percent share of the dynamic random access memory industry—a technology not possessed by the Chinese until very recently. As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly. I am here to say that enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity,” said Ross.
“The theft of intellectual property on a continuing basis by nation-state actors is an even more damaging affront to the rule of law,” said U.S. Attorney Alex Tse. “We in the Northern District of California, one of the world’s great centers of intellectual property development, will continue to lead the fight to protect U.S. innovation from criminal misappropriation, whether motivated by personal greed or national economic ambition.”
“No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China,” said FBI Director Christopher Wray. “The Chinese government is determined to acquire American technology, and they’re willing use a variety of means to do that – from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information.”
According to the DOJ, Jinhua is a state-owned enterprise of the PRC, funded entirely by the Chinese government, and established in February 2016 for the sole purpose of designing, developing, and manufacturing DRAM.
While addressing the media on Tuesday, the Director of the National Counterintelligence and Security Center William Evanina addressed how nation-state actors are becoming more aggressive in attacking the U.S. supply chain.
“Data exfiltration hasn’t slowed down in recent times, especially from an economic/espionage position. When you look at the proprietary data and trade secrets that are being stolen constantly, they don’t even make the news anymore, because they are so constant they are no longer newsworthy.”