The American chipmaker's secrets were leaked to a state-backed Chinese chipmaker via a top Taiwanese manufacturer.

The Motley Fool
Date: Nov 4, 2020
By: Leo Sun

United Microelectronics (NYSE:UMC), the second-largest contract chipmaker in Taiwan after Taiwan Semiconductor Manufacturing, recently pled guilty to stealing trade secrets from American memory chipmaker Micron Technology (NASDAQ:MU).

The U.S. Department of Justice launched the investigation two years ago when three of UMC's employees were accused of passing Micron's designs to Fujian Jinhua, a state-owned chipmaker in China. Those three employees — Stephen Chen, J.T. Ho, and Kenny Wang — previously worked at Micron's subsidiary in Taiwan.

UMC initially hired Chen as a senior VP and assigned him to oversee a DRAM project with Fujian Jinhua. Chen subsequently brought Ho and Wang (who allegedly stole the chip designs from Micron) to his division — which then passed the designs to Fujian Jinhua to create new chips.

UMC agreed to pay the DOJ a $60 million fine and cooperate with additional investigations of Fujian Jinhua. That ruling certainly tarnishes UMC's reputation, but it could be even worse news for Micron — which previously issued warnings regarding China's memory chip ambitions.
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