Chip spies arrested in South Korea

Just what we need in the boring old chip industry, a John LeCarre style tale of corporate espionage, intrigue and sex.

Well, ok, no sex, but the rest still applies as South Korean prosecutors rolled out indictments for 18 people charged with chip-making technology theft.

And the main characters in this particular spy novel? Well, they certainly don’t disappoint, with even a US based VP from Applied Materials heading up the list. Others among the accused include employees from Samsung and Hynix as well as others from Applied Materials’ South Korean branch.

For some quick plot background, Samsung and Hynix are the top two DRAM makers, whilst Samsung is also the biggest producer of NAND flash chips. Hynix also dabbles in NAND, but comes in third after Japan’s Toshiba.

Apparently, employees from South Korea’s Applied Materials branch managed to get their grubby paws on Samsung’s “core technology” after doing some maintenance work on the chip-making machines, but what was actually done with the information isn’t yet clear.

Still, in a paranoid semiconductor industry ravaged by financial crisis, if you’ve got a patent, you certainly don’t want its blueprints passed around between competitors.

Of the 18 indicted, only four have apparently been banged up while awaiting trial, and prosecutors are still deciding whether to ask the US to extradite its incriminated Applied Materials VP, who incidentally also used to work at Samsung.

Aha, the plot thickens.

In a filing to the U.S. Securities and Exchange Commission, Applied said it believed there were “meritorious defenses to the charges” and that it was “taking appropriate measures to address this matter.”

Taking a slightly less arrogant tack, Samsung admitted it was “very concerned by this transgression as it is likely to damage the semiconductor market.”

The firm, according to a spokesperson, would be taking “appropriate measures.”

Meanwhile, Hynix said the firm felt “great regret” over the incident.

It’s a chip eat chip world out there. So, pass the ketchup.