In an escalating battle between the People’s Republic of China and the United States, on November 1, 2018, the U.S. Department of Justice filed a criminal complaint against United Microelectronics Corporation (UMC), Fujian Jinhua Integrated, Co. Ltd (Jinhua), a Chinese government owned-enterprise, and Chen Zhengkun aka Stephen Chen (Chen). The charges included, among other things, stealing and possessing trade secrets created and owned by U.S. based Micron Technology (Micron).
The complaint alleges that Chen, who became President of Jinhua in February of 2017 and was put in charge of its dynamic random access memory (DRAM) production facility, induced two unnamed employees of Micron’s Taiwanese division to steal hundreds of pages of documents containing “detailed, confidential information used to design and construct efficient manufacturing processes for advanced DRAM technology.” The complaint further alleges that Jinhua used these stolen trade secrets to kick start its mass production of DRAM.
The DOJ’s complaint comes on the heels of other major events dealing with the price and supply of the much-coveted DRAM technology. In April 2018, Micron, Samsung Electronics, and SK Hynix—the three top producers of DRAM—were hit with a class action complaint alleging antitrust violations in connection with their alleged conspiracy to limit the supply of DRAM to artificially drive up its price throughout the world.
According to numerous news outlets, China is the world’s largest importer of DRAM. On May 31st of this year, after the putative class action complaint was filed, China’s State Administration for Market Regulations allegedly gave Micron, Samsung Electronics, and SK Hynix a stern talking to about their alleged price fixing. Then in July, a Chinese court barred Micron from selling a whole host of technology in China, including a select range of DRAM. Maybe in retaliation for China’s aggressive intervention, on October 28, 2018, the U.S. Department of Commerce restricted U.S. companies from buying components from Jinhua without a special license.
Reminiscent of a multipart episode of Madam Secretary, the international commercial battle lines are being drawn with Micron and Jinhua acting as reluctant proxies for their respective nations in the escalating DRAM drama. While it is hard to say what will come next—corporate espionage, political maneuvering, or additional civil lawsuits, one thing is certain--all parties appear ready to go “all in” to protect their interests.
What do you see on the DRAM horizon? Let us know in the comments section below.
Kevin Collins co-authored this article.
Kevin Collins is Of Counsel in Buchalter’s Sacramento office, and is a member of the Firm’s Litigation Practice Group. He is an experienced trial lawyer who focuses his practice on complex litigation.