Espionage, Conspiracy Charges Faced By Sunnyvale Company: Feds

MOUNTAIN VIEW, CA — A Sunnyvale company working for China alongside a Taiwanese firm with three individuals were indicted by a federal grand jury on multiple counts of espionage and conspiracy charges related to the theft of trade secrets of an American semiconductor company, the U.S. Attorneys Office in San Francisco said Thursday.

Taiwan-based United Microelectronics Corporation, which operated in the Silicon Valley on Deguigne Drive and Fujian Jinhua Integrated Circuit as a China-owned enterprise may face a forfeiture and a maximum fine of $20 billion. The individuals — Stephen Chen, Kenny Wang and He Jianting — may have to pay penalties of up to $5 million each for economic espionage charges, if convicted. The defendants may also be ordered to serve 15 years in prison and 10 years for the theft of trade secrets.

They will come before U.S. Magistrate Judge Susan van Keulen on Nov. 19.

The multi-defendant indictment alleges 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 of Idaho. Its worth is estimated at $100 billion and accounts for about a quarter share of the random access memory industry.

Chen was a general manager of a company that Micron bought in 2013. He then became the president of a subsidiary before resigning two years later and subsequently came on board at UMC. While there, the U.S. Department of Justice contends he helped to negotiate a cooperative agreement to transfer the technology to the foreign company to mass produce. He recruited the other two men to steal information imperative to the U.S. company's operation, the U.S. Attorney's Office said.

In one instance, he "downloaded over 900 Micron confidential and proprietary files" before he left, the claim indicates.

"The theft of intellectual property is not only unfair, but stifles technological innovation by (providing a disincentive for) investment in long-term research and development," U.S. Attorney Alex Tse said.

The complaint reads: "Growth of the electronics industry in the People's Republic of China created significant demand for memory products such as DRAM." Chen recruited the other defendants between October 2015 and April 2016. When UMC filed a patent application, Ho was listed as "a named inventor on the patent application" that suspiciously resembled Micron's materials.

"The attempts by foreign governments to illegally obtain U.S. intellectual property and trade secrets pose a substantial threat to our national security and economy," Special Agent In Charge John F. Bennett said, adding the Bay Area is often "a target of economic espionage" because of "its unique blend of human talent and innovative technologies."

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