The Korean government is approving the sale of national core technologies to foreign companies, national core technology transfers, or foreign investment in national core technology holding organizations after receiving reports on them. The number of such cases has more than tripled over the last five years.
National core technologies are defined to be 75 technologies in 13 fields including semiconductors, automobiles, and secondary batteries that have high technological and economic value and can adversely affect national security and the Korean economy if leaked abroad, and must be reviewed before being sold or transferred to foreign companies. Violators of this rule are subject to imprisonment for up to 20 years or a fine of up to 2 billion won (US$1.5 million).
According to the Ministry of Trade, Industry and Energy (MOTIE) on Aug. 28, the number of approvals for and reports of the export of national core technologies and mergers and acquisitions (M&A) involving such technologies in the last five years stood at 27 in 2018, 54 in 2019, 54 in 2020, 85 in 2021, and 87 in 2022. The number of such approvals has been on the rise every year and has more than tripled in the last five years due to an increase in overseas production facility investments mainly in semiconductors, batteries, biotechnology, and electrical and electronics, drug approvals, and patent litigation, the MOTIE explained.
The export of national core technologies refers to the sale or a transfer of technology to foreign companies, while M&A means foreign investment in organizations holding national core technologies. If you want to export or M&A a national core technology, you must get permission from the MOTIE. Approval is required in the case of national R&D support, and reports are required in other cases. Deliberations focus on national security and effects on the Korean economy. Technology exports from and M&As between colleges and research institutes that possess national core technologies are also subject to review.
As core industrial technologies such as those for semiconductors are frequently leaked, the government and political circles are working to improve the system and revise laws to prevent such leaks. To this end, the MOTIE plans to promote the designation and management of experts in high-tech strategic technologies by December. The designation of specialized personnel will be made by the Ministry of Trade, Industry, and Energy (MOTIE) after deliberations by the High-Tech Strategy Committee and designation by the MOTIE.
Through this, companies will be able to sign technology protection agreements with specialized personnel to restrict their transfer to overseas companies in the same industry, prevent the leakage of strategic technology-related secrets and provide information on job changes and startup foundation after retirement. In addition, in case of technology leakage, companies will be able to request the government to check the immigration records of specialized personnel.
In addition, the Industrial Technology Protection Committee’s meeting will be expanded from four times a year to eight to 10 times a year, and a meeting of the Policy Council of the Industrial Technology Protection Committee will be regularized to be held once a quarter. When a foreigner invests in a Korean company, the Korean government will review and deliberate on the company’s core technology, material possession and production, the possibility of foreigners controlling Korean industries, and their investment’s overall impacts on Korea’s supply chains, industry, and national defense.