The South Korean government has drawn up tough measures to stop the repeated leakage of advanced technology abroad. It will grant the Ministry of Trade, Industry and Energy special judicial police powers over technology leaks and will add the sale or withdrawal of companies’ overseas subsidiaries, as well as indirect mergers and acquisitions by foreign buyers, to the list of transactions requiring approval when national core technologies are involved. The scope for recovering criminal proceeds will also be expanded significantly.
Trade Minister Kim Jung-kwan announced the measures on the 19th at the 76th meeting of the Industrial Technology Protection Committee.
The government will first widen the range of gains from technology leak crimes subject to confiscation and collection. It also plans to ensure that damages awarded to victimized companies include, at a minimum, the costs spent developing the technology in question. Supreme Court sentencing guidelines for technology leak crimes will be raised, and new guidelines for fines will be established.
The investigative framework will be overhauled as well. The plan is to introduce special judicial police powers so that ministry officials with expertise in industrial technology can conduct investigations directly. The measures come as leaks targeting advanced industries such as semiconductors and displays continue unabated. The National Intelligence Service detected 107 cases of industrial technology flowing overseas over the five years from 2021 through last year. The government will reflect the measures in amendments to the Industrial Technology Protection Act and the Special Act on National Advanced Strategic Industries, to be introduced this month.
The government believes that leaks of advanced technology in artificial intelligence or semiconductors go beyond damaging corporate competitiveness and can open serious cracks in the contest for national technological supremacy. If core technologies developed with enormous capital and time are handed to a rival country in an instant, the lead and margin built up with difficulty can collapse at once.
Leaks of South Korea’s advanced technology have already reached a serious level. The 10-nanometer DRAM mass-produced by China’s ChangXin Memory Technologies is known to have relied on core technology that leaked out in 12 pages of notes handwritten by a Samsung Electronics researcher who was about to leave the company. Core technology also leaked from SK hynix. An employee working at its sales subsidiary in China printed 186 pages of trade secret documents related to image sensor processes and photographed 5,900 more before taking them out, seeking to move to a Chinese company. Losses to South Korean industry from technology that has flowed out this way since 2020 amount to 23.27 trillion won ($15.9 billion). Taking into account development costs that companies invested over long periods, along with the revenue and technological edge lost when rivals enter the market, the actual damage is likely to be far greater.
The damage has been concentrated in semiconductors, the mainstay of South Korean exports. According to data the ministry submitted to the office of Koo Ja-keun, a People Power Party lawmaker, semiconductors accounted for 40 of the 107 overseas technology leak cases detected by the National Intelligence Service from 2021 to 2025, or 37.4%.
China is the main destination. Of the 33 overseas technology leak cases in which police made arrests last year, 18 — more than half — involved China. The problem is that China is catching up faster. According to the Korea Evaluation Institute of Industrial Technology’s 2025 survey of industrial technology levels, South Korea and China stood at 90.2% and 89.1%, respectively, with the United States set at 100%. The gap between the two narrowed to 1.1 percentage points from 5.0 percentage points in 2023. In next-generation semiconductors, a category spanning AI, sensor and automotive chips, China was assessed at 82.1%, ahead of South Korea’s 79.2%.
With the technology gap closing, the competitiveness of domestic companies could weaken even faster if core processes and mass-production know-how pass to rival countries. Semiconductors require vast cost and time to optimize conditions for each process step and raise yields. Latecomers that obtain proven technology can cut trial and error and bring mass production forward.
Once technology has gone abroad and been applied to a rival’s production lines, punishment after the fact cannot restore a technological edge already lost. The push to give the ministry special judicial police powers is aimed at detecting leaks early and blocking their spread. Widening the review to cover sales of overseas subsidiaries and indirect M&A is likewise intended to stop core technologies before they leave the country.
“Technology leaks are a grave problem that destroys in an instant the industrial competitiveness that the state and companies have accumulated over long periods and at enormous cost, and that even threatens national security,” Kim said.
Technology theft at home is also a problem. According to the National Police Agency, 146 of the 179 technology leak cases in which arrests were made last year, or 81.6%, were domestic. Small and medium-sized enterprises were the victims in 155 cases, or 86.6% of the total. Cases involving insiders such as employees and executives numbered 148, or 82.7%. In effect, national industrial competitiveness is being shaken abroad while the survival of smaller firms is threatened at home.
Domestic technology theft is especially serious because it can threaten the survival of the affected company. Smaller firms whose revenue is concentrated in a single technology or product risk losing clients and markets if core technology is taken. Even so, adequate compensation is hard to obtain because it is difficult to prove how much revenue was lost to a leak. Under the current Industrial Technology Protection Act, willful infringement can draw damages of up to five times the amount of loss recognized, but the provision loses force when little loss is recognized in the first place.
#TechLeaks#KoreaSemiconductors#TradeSecrets#SamsungElectronics#SKhynix#IndustrialPolicy
Original reporting by Lee Jung-hoon and Joo Jae-hyun for Seoul Economic Daily.
AI-translated from Korean. Quotes from foreign sources are based on Korean-language reports and may not reflect exact original wording.
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