Inside the chip talent war: Trade secrets and rising Chinese rivals

A Chinese flag is displayed next to a "Made in China" sign seen on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023.

Florence Lo | Reuters

A former Samsung Electronics employee who later joined Chinese memory chipmaker ChangXin Memory Technologies, or CXMT, was reportedly sentenced by the Seoul High Court on Oct. 22 to five years in prison for leaking Samsung's technology.

The sentence was reduced from seven years at his first trial in April. The former employee had joined CXMT in 2016.

The case highlights an intensifying battle over semiconductor know-how as Chinese chipmakers narrow the gap with established rivals, putting the race for top engineering talent increasingly at odds with efforts to protect trade secrets.

In 2023, a South Korean court granted Samsung's request to block a former DRAM researcher from joining U.S. rival Micron. It ruled that the two-year non-compete was not excessive and was necessary to protect Samsung's technology and business information, JoongAng Ilbo reported.

Closing the gap

A decade ago, Chinese memory chipmakers were not Samsung's biggest concern when it came to losing experienced engineers.

Instead, the South Korean company was more focused on employees leaving for established rivals such as SK Hynix and Micron, according to a former employee who asked not to be identified because the information was private.

Samsung has been monitoring where certain departing employees went — to signal to remaining staff that moving to competitors would be difficult — according to a former employee.

The company also used non-compete agreements restricting employees from joining rivals for two years, as part of their employment contracts, with senior employees holding valuable technical expertise likely facing closer scrutiny.

But Samsung's concern extended beyond individual departures.

Nurphoto | Nurphoto | Getty Images

Protecting trade secrets

But the challenges extend beyond Taiwan.