Caixin
Oct 23, 2020 02:21 PM
BUSINESS & TECH

Taiwan’s UMC Nears Settlement on Leaking Micron Secrets to Chinese Mainland

(Nikkei Asia) — Taiwan’s United Microelectronics Corp. will soon settle an intellectual property suit brought against it by the U.S. Department of Justice with a $60 million fine, the chipmaker said Thursday.

UMC has been charged with a conspiracy to steal technology from U.S. chipmaker Micron Technology used in dynamic random access memory, or DRAM, chips, for the benefit of a Chinese company.

The case is widely seen as a microcosm of the widening tech war between China and the U.S.

UMC said in a filing to Taiwan’s stock exchange that it expects “a court hearing will occur in the near future to address the anticipated resolution of these charges.”

The company was initially expected to pay up to $20 billion in fines. Under a proposed resolution, UMC will plea to a lesser charge and pay the lower fine, according to the filing.

Some see the proposed resolution as a possible overture by the U.S. to Taiwan’s chip industry.

“The U.S. has had a renewed recognition of the importance of Taiwan’s semiconductor technology, and wants to bolster their cooperation,” said Liu Pei-chen, a semiconductor analyst at the Taiwan Institute of Economic Research.

“It needed to show the Taiwanese side that it is acting in good faith, which led to the latest understanding,” Liu added.

A representative from UMC told Nikkei Thursday that it seeks a swift, formal resolution on the matter.

In 2017, Micron accused the Taiwan company of stealing its DRAM technology in coordination with three former employees who moved to UMC, then passed the secrets to China’s Fujian Jinhua Integrated Circuit, also known as JHICC. A U.S. grand jury indicted UMC and JHICC in November 2018 on economic espionage charges.

“JHICC has already been forced to disband its DRAM operations, so the U.S. has already met its initial goal of curbing Chinese DRAM production,” Liu said.

JHICC was established in 2016 as part of China’s national push to strengthen its semiconductor industry, specifically in DRAM. These chips are vital components in consumer electronics as well as weapons, and producing them domestically is key to China competing with the U.S.

But three companies — Samsung Electronics, SK Hynix and Micron — control almost all of the global DRAM market and patents. JHICC is believed to have orchestrated the plot as a way to break into the field with the help of partner UMC.

Meanwhile, the Taiwan company likely saw an opportunity to make further inroads in Chinese mainland, which was then its top priority as it fell behind local rival Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker. UMC still has many customers on the mainland.

This article was originally published by Nikkei Asia

Contact editor Yang Ge (geyang@caixin.com)

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