If patent litigation is a contest fought inside the rules, the threat to South Korea's chip industry outside the law is technology theft. Attempts to spirit core technology abroad — including trade secrets never registered as patents — have continued without letup. Police data show 49 cases of semiconductor technology leaks were uncovered from 2022 through the end of July this year. Of those, 19 cases, or 38.8%, involved attempts to move the technology overseas. Among all overseas technology leak cases detected during the period, semiconductors ranked second after displays, which accounted for 27 cases.
The Korea Intellectual Property Protection Agency, which monitors intellectual property infringement at home and abroad under the Korean Intellectual Property Office, is also watching overseas chip technology leaks closely. Shin Sang-gon, president of the agency, met with The Seoul Economic Daily at the Korea Intellectual Property Center in Seoul's Gangnam district on the 6th and said recent methods have grown "more varied and more sophisticated, including poaching engineers, hostile mergers and acquisitions, and stealing technology through second- and third-tier suppliers."
Shin stressed repeatedly that in the chip sector, attempts aimed at mid-sized and small companies are more dangerous than those aimed at large conglomerates. Large firms have trade secret controls and security systems in place, so attempts to extract technology rarely succeed. Industrial spies instead burrow into mid-sized and small companies, where controls are relatively loose, to pull out technical information belonging to the prime contractor. "Even the largest company cannot run every technology on its own," Shin said. "That is why industrial spies look for gaps at second- and third-tier suppliers."
The agency cites three reasons mid-sized and small companies are vulnerable: a shortage of security budgets and staff; failure to meet the "secrecy management" requirement that trade secret status demands under the law; and frequent job changes and departures among key researchers. The factors reinforce one another. Insufficient investment in security means the requirements for managing trade secrets go unmet, and technical staff who leave such a workplace readily let slip information they never recognized as a trade secret.
"You cannot stop employees from changing jobs or leaving, but if you want them to protect trade secrets after they go, you have to give them enough security training while they are still with the company," Shin said. "Many small companies have only a weak grasp of what managing trade secrets means." He added that "the reality is that some small companies still see rudimentary leaks through email or USB drives."
The agency runs a consulting program on trade secrets and technology protection to strengthen companies' ability to prevent leaks. The program diagnoses how mid-sized and small companies manage technology protection and helps them build management systems; small companies can use it free of charge. "We will launch a pilot service for trade secret management using artificial intelligence late this year," Shin said. "We are developing a system that will let mid-sized and small companies protect their technology more easily, with AI automatically classifying trade secret documents by sensitivity level."
Shin pointed to a change in chief executives' thinking as the ultimate answer to protecting mid-sized and small companies from technology theft. "The targets of technology theft are expanding to second-, third- and fourth-tier suppliers," he said. "The damage does not stop at exposing one small company's technology; it can lead to a trade secret leak that affects the entire industrial ecosystem." He added: "It is time for the chief executives of small companies that have not paid attention to trade secret protection to take an interest themselves. They need to keep in mind that a small hole can bring down the whole levee."
