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Chinese company charged with stealing trade secrets from US chipmaker

The economic espionage targeted trade secrets worth billions, the Department of Justice says.

US Attorney General Jeff Sessions announced charges Thursday against Chinese and Taiwan companies for alleged theft of business secrets from US chip giant Micron.

US Attorney General Jeff Sessions announced charges Thursday against Chinese and Taiwanese companies for alleged theft of business secrets from US chip giant Micron.

Jim Watson/Getty Images

The US Justice Department on Thursday swung hard at China with a one-two punch intended to counter industrial espionage.

First, the agency unveiled charges against Chinese and Taiwanese companies and individuals for allegedly stealing trade secrets related to semiconductor technology. That case involves Idaho-based Micron Technology.

Second, Attorney General Jeff Sessions announced an initiative to address Chinese cyberattacks and corporate spying on US companies. 

"Chinese economic espionage against the United States has been increasing -- and it has been increasing rapidly," Sessions said in a statement. "We are here today to say: Enough is enough. We're not going to take it anymore."

Relations between the US and China have been tense in a wide range of areas touching on technology and the economy. In recent months, for instance, the US has taken action against Chinese phone maker ZTE tied to international trade activities and against networking giant Huawei over national security concerns. In the last year, the Trump administration and the government in Beijing have imposed a series of trade sanctions on an extensive array of goods.

President Donald Trump has also accused China of engaging in propaganda campaigns over social media similar to what Russia and Iran have done. Lawmakers have pushed back on those allegations, asking Director of National Intelligence Dan Coats to provide evidence of Chinese interference in US elections

The Micron case

Sessions said Chinese state-owned chipmaker Fujian Jinhua, Taiwan semiconductor foundry United Microelectronics Corporation and three Taiwanese nationals stole trade secrets from chipmaker Micron.

One of the nationals served as chairman of a company Micron acquired in 2013, the Justice Department said. He became the president of a Taiwanese branch under Micron, resigned in 2015 and brought trade secrets over to UMC, which is publicly traded on the New York Stock Exchange, and which had a technology-sharing agreement with Fujian Jinhua, prosecutors said.

The other two nationals are also former Micron employees.

According to the indictment, the Taiwanese nationals downloaded more than 900 confidential files from Micron. Those trade secrets are now worth nearly $9 billion, the agency said.

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The indictment was filed Sept. 27 and unsealed Thursday. The Justice Department also filed a civil lawsuit to stop the trade secrets in question from spreading, Sessions said.

Those trade secrets center on a technology known as DRAM (dynamic random access memory), which these Chinese companies didn't have until the data theft, prosecutors said.

If convicted, each individual faces up to 15 years in prison and a $5 million fine.

"We appreciate the US Department of Justice's decision to prosecute the criminal theft of our intellectual property," said Joel Poppen, Micron's senior vice president for legal affairs. "Micron has invested billions of dollars over decades to develop its intellectual property. The actions announced today reinforce that criminal misappropriation will be appropriately addressed."

UMC said the allegations in the virtually the same as those included in a lawsuit Micron filed last year against UMC.

"UMC regrets that the US Attorney's Office brought these charges without first notifying UMC and giving it an opportunity to discuss the matter," UMC said in a statement.

The China initiative

The US also views China as a major cybersecurity threat. China has continued hacking US companies despite a 2015 agreement between Chinese President Xi Jinping and then US President Barack Obama that banned government spying on industries, Sessions said during Thursday's press conference.

"That commitment has not been met," he said.

Now the Justice Department has a new China Initiative focused on deterring Chinese espionage and protecting against the theft of trade secrets from US companies.

"This initiative will identify priority trade theft cases and ensure we have enough resources dedicated to them," Sessions said Thursday.

On Tuesday, the Justice Department also announced charges against two Chinese intelligence officers and a team of hackers for allegedly stealing sensitive commercial aviation secrets and data. That was just a day after the Department of Commerce restricted exports to Fujian Jinhua, calling the company a national security risk.

Security researchers have warned for months about China ramping up cyberattacks, with hackers targeting industries across the board, Dmitri Alperovitch, co-founder of cybersecurity firm CrowdStrike, said in a statement.

"China is back as the most prolific nation-state actor conducting industrial espionage via cyber and non-cyber means," he said.

First published Nov. 1, 11:12 a.m. PT.
Update, 12:54 p.m.: Adds statement from Micron. Update, 5:30 p.m. with comment from UMC.

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