It is reported that a former Samsung Electronics employee, who later joined China's memory chip manufacturer ChangXin Memory Technology ( CXMT ), was sentenced to five years in prison by the Seoul High Court in South Korea on October 22 for leaking Samsung's technology.
The sentence was reduced from the seven years imposed during the first trial in April. The former employee joined CXMT in 2016.
This case highlights that the competition for semiconductor technology expertise is intensifying. As Chinese chip manufacturers narrow the gap with their established competitors, the conflicts between competing for top engineering talent and protecting trade secrets are also becoming increasingly prominent.
According to a report by the Central Daily, in 2023, a South Korean court approved Samsung's request to prevent a former DRAM researcher from joining its American competitor Micron Technology (Micron). The court ruled that a two-year non-compete clause was not excessive and was necessary for protecting Samsung's technical and business information.
The gap is narrowing.
Ten years ago, Chinese memory chip manufacturers were not the main concern for Samsung when it came to losing experienced engineers.
According to a former employee who requested anonymity, at that time, the South Korean company was more concerned about employees leaving for established competitors such as SK Hynix and Micron, as such information was considered private.
This former employee stated that Samsung has been monitoring where departing employees go in order to send a signal to those still employed, indicating that it is not easy to switch to competitors.
As part of the employment contract, Samsung also uses non-compete agreements to restrict employees from joining competitors within two years; senior employees with valuable technical expertise may face even stricter scrutiny.
However, Samsung's concerns are not limited to the departure of individual employees.
This former employee said, 'This is not just a matter of one employee leaving. The company wants to convey a message to those who stay: it's not easy to switch to a competitor.'
At the same time, Jeong Gyu-choi ( Jeongku Choi ), a senior analyst from South Korea's Counterpoint Research, stated that Chinese semiconductor companies are recruiting engineers with overseas experience through high salaries, stock options, housing, and family support in order to narrow the technological gap.
Cui stated that, amidst the US export restrictions that hinder China's access to advanced chip manufacturing equipment, the professional capabilities of these engineers have helped Chinese chip manufacturers overcome technical bottlenecks.
She added that Chinese manufacturers, once considered unlikely to catch up with established manufacturers, are now seen as "significant competitors."
According to Counterpoint's Memory Tracker, based on predictions for the second quarter of 2026, CXMT is expected to account for 10% of the global DRAM revenue.
Cui stated that mature chip manufacturers are strengthening legal protection and internal security measures, while also adjusting their compensation packages to retain key engineers.
She also mentioned that South Korea has designated certain semiconductor manufacturing technologies as "national core technologies," thereby increasing the penalties for unauthorized disclosure of these technologies.
As Chinese memory chip companies begin to expand beyond their domestic markets, legal disputes may further intensify.
Cui said, 'I believe that once Chinese memory chip companies start to expand their exports beyond the Chinese market, the scope of management for such business secrets will further extend to areas related to intellectual property and law.'
Protect trade secrets
Increasing competition has made it a more pressing issue for semiconductor companies to protect the knowledge that engineers accumulate throughout complex manufacturing processes.
In Taiwan, home to TSMC, the world's largest contract chip manufacturer, the protection of trade secrets has also been evolving in tandem with the increasing strategic importance of the semiconductor industry.
Innovatus Law, a partner specializing in antitrust and intellectual property, stated that Taiwan limits the non-compete period after leaving a job to two years and requires employers to pay at least half of the former employee's average monthly salary as compensation during that period. Yang
Yang added that the complexity of semiconductor manufacturing makes it very difficult for any single engineer to acquire enough knowledge to replicate an entire production line elsewhere.
Yang said, “It’s almost impossible for anyone to have enough information to replicate that production line in any other company.”
She added that as competition for top talent intensifies, the movement of engineers between competing semiconductor companies may increase slightly, and the number of trade secret lawsuits filed by companies to protect their technological advantages may also rise.
But the challenges are not limited to Taiwan.
In Singapore, Lee and Lee, partners of the law firm Zechariah Chan, stated that in the semiconductor industry, it is particularly difficult to protect trade secrets, as proprietary knowledge often involves intangible manufacturing technologies and methods.
Once engineers become aware of this information, it is impossible to “take it back” again.
Chan indicates that it is also difficult to prove that competitors are using proprietary manufacturing technologies, as outsiders usually only see the final product.
He said, "There is no clear boundary between an engineer's professional experience and proprietary information." General skills and knowledge remain with the engineer, while trade secrets belong to the company.
In Singapore, non-compete clauses are only enforceable when they are intended to protect legitimate business interests and are reasonable in terms of scope, geographical area, and duration.
According to Jezamine Fewins, the head of litigation at the Hong Kong law firm Lewis Silkin, Hong Kong courts generally adopt a restrictive attitude towards non-compete clauses and will only enforce them when they protect legitimate business interests and do not go beyond what is necessary.
Fewins indicates that courts prefer to use injunctions to protect trade secrets.
She added, "The difficulty lies in the fact that trade secrets often exist in the minds of employees." If the disclosure of information to competitors could cause significant harm to the former employer, and if the company has taken measures to restrict access to such information, then it is more likely that this information will be deemed a trade secret.
Fewins says that for chip manufacturers, it is crucial to clearly define what constitutes trade secrets, to ensure that employees are aware of this information, and to implement measures to restrict access to it.
Samsung and CXMT have not responded to CNBC's request for a comment.
