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Mainland Chinese Company Indicted for Economic Espionage

The U.S. Department of Justice announced on 1 November that a federal grand jury has indicted a mainland Chinese state-owned enterprise, as well as a Taiwan-based company and three individuals, for crimes related to a conspiracy to steal, convey and possess stolen trade secrets of U.S. semiconductor company Micron Technology Inc. for the benefit of a company controlled by the mainland Chinese government, along with a conspiracy to commit economic espionage. In addition, the United States has filed a civil lawsuit seeking to enjoin the further transfer of the stolen trade secrets and to enjoin certain defendants from exporting to the United States any products manufactured using the trade secrets at issue. The Justice Department worked with the California office of the Federal Bureau of Investigation in developing the charges. 

According to information from the Justice Department, Idaho-based Micron is a leader in the global semiconductor industry specialising in research, development and manufacturing of computer memory products, including dynamic random-access memory (DRAM). Micron is the only U.S.-based company that manufactures DRAM, a leading-edge memory storage device used in computer electronics, and its competitive advantage in this field is largely due to its intellectual property (including trade secrets with detailed confidential information pertaining to the design, development and manufacturing of advanced DRAM products). The company is worth an estimated US$100 billion and has a 20 to 25 percent share of the DRAM industry.

According to the Justice Department, prior to the events described in the indictment mainland China did not possess DRAM technology and the mainland Chinese government had publicly identified the development of DRAM and other microelectronics technology as a national economic priority. Justice contends that the mainland Chinese defendant had been established in February 2016 for the sole purpose of designing, developing and manufacturing DRAM.

U.S. Attorney-General Jeff Sessions indicated on 1 November that “as this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly”, adding that the Justice Department “will aggressively prosecute such illegal activity.”

If convicted, the individual defendants face a maximum sentence of 15 years imprisonment and a US$5 million fine for economic espionage charges, as well as 10 years imprisonment for theft of trade secrets charges. If convicted, each company faces forfeiture and a maximum fine of more than US$20 billion. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.

As previously reported, the U.S. Department of Commerce has also added the mainland Chinese defendant to the Entity List effective 30 October after determining that it poses a significant risk of becoming involved in activities that could have a negative impact on U.S. national security interests. For this mainland Chinese entity there will now be a licence requirement for exports, re-exports or transfers (in-country) of all items subject to the Export Administration Regulations and a licence review policy of presumption of denial. In addition, no licence exceptions are available for exports, re-exports or transfers (in-country) to this entity.

Content provided by Picture: HKTDC Research
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