ExclusiveLetter From Prison: South Korean Chip Exec Denies Stealing Samsung Data For China Factory
Hykyung Yang and Joo Min Park
SEOUL (Reuters) - A South Korean chipmaker jailed on industrial espionage charges has denied trying to build a chip factory in China that copies sensitive information developed by Samsung Electronics.
In a handwritten letter to Reuters, his first comments to the media since his May 25 arrest, Choi Jinseog outlined his defense plan and said the Xi'an plant allegations had not been substantiated.
Earlier this month, prosecutors accused a former Samsung executive of illegally providing classified information to build a semiconductor plant just 1.5 km (1 mile) from the Samsung factory in Xi'an.
Choi is in a detention center in Suwon, a city south of Seoul that houses the headquarters of Samsung. Previously, he had denied all allegations through his lawyer.
In the letter, Choi said that Taiwan's Foxconn will produce the first test DRAM memory chips, while Samsung's factory in Xi'an will produce NAND flash memory chips.
Choi said the DRAM manufacturing process is different from more than 30 percent of NAND flash memory chips because it's more complex, and some of the equipment used to make the two chips is also different.
"They use different hardware, and [Samsung's] NAND flash design is really useless to us," Choi said in the letter.
Several semiconductor industry experts interviewed by Reuters, who are not involved in the litigation, confirmed that there are differences in the processes and equipment used to produce NAND and DRAM, without providing further details.
Samsung declined to comment, citing an ongoing investigation.
Neither Foxconn nor the companies hired to build the Samsung factory have been charged.
Foxconn, officially called Hon Hai Precision Industry Co Ltd, previously quoted Reuters comments saying it was "aware of the speculation" in the matter, but declined to comment on the ongoing investigation.
"We comply with the laws and regulations governing the jurisdictions in which we operate," said Foxconn.
SECRET DATA
According to the 18-page indictment, not previously released by Reuters, prosecutors allege that Choi planned to build a DRAM factory in Xi'an for Foxconn and illegally used confidential data obtained by his company's employees from employees of two Samsung subcontractors.
A NAND flash chip is a storage chip that retains data even when the device is turned off, unlike a DRAM chip that loses data when the power is turned off. Both are used in smartphones, computers and many other electronic devices.
Prosecutors say Choi robbed "a large number" of employees of Samsung and its subsidiaries and lobbied several employees for secret information about the operation of special semiconductor "clean rooms," as well as drawings and factory plans to shorten the construction times. a factory in China is planned.
Choi's lawyer Kim Pilsung said the information is not confidential and not accessible to anyone involved in the chip's supply chain. Prosecutors say it is a "key national technology" protected by law and that their theft cost Samsung more than $200 million in damages.
TO CONTINUE
Choi sent the letter to Reuters through an advisor she recently visited. The adviser, also a close friend, spoke on condition of anonymity due to the sensitivity of the subject.
According to Roh Hwa Wook, another longtime friend of Choi's who visited him on Thursday, Choi confirmed that the letter was authentic.
In his letter, Choi said his plan was to create a line of chips for research and development, rather than copying Samsung's mass-production capabilities.
According to Choi and his lawyer, the plant, known as the Factory, was never built after Foxconn left.
"We planned to build an R&D factory, and there is no R&D factory in the Xiang (Samsung) factory. If there is no R&D factory to copy, there is no reason to copy,” Choi said.
Prosecutors declined to comment on Choi's letter before the July 12 trial. They say the case centers on the illegal acquisition and use of classified information, which Tsoi denies.
Choi also rejected the prosecution's claim that it wanted to build the alleged copier factory in Xi'an, saying the plan was to build it in Qingdao after weighing several cities including Xi'an.
Authorities in Qingdao and Xi'an did not respond to Reuters requests for comment.
Choi's lawyer Kim said he plans to seek bail, citing Choi's condition following heart surgery earlier this year.
Choi, a consultant, said the defendants were "relieved" and "shocked" by allegations of industrial espionage, which several chip experts interviewed by Reuters said were part of South Korea's efforts to slow the progress of chip production in China.
(Reporting by Hae Kyung Yang and Joo Min Park; Additional reporting by Josh Ye in Hong Kong and Ben Blanchard in Taipei; Editing by Mien Kim and Lincoln Fist.)
