Technology Leakage to China
Samsung Display’s edge panel technology for a curved edge of a smartphone screen has leaked to China. The Suwon District Prosecutor’s Office announced on Nov. 29 that it arrested and charged three persons, including the CEO of Toptec, and indicted eight persons without detention for a violation of the Act on Prevention of Divulgence and Protection of Industrial Technology.
According to the prosecutor’s office, those persons received specifications and drawings regarding 3D lamination equipment for flexible OLED edge panels from Samsung Display in April this year, leaked the trade secrets to the company they established, and then leaked some of the secrets to a Chinese company. Also, they produced 24 units of 3D lamination equipment based on the secrets from May to August this year, exported 16 to China, and were attempting to export the rest to China. They previously sold lamination equipment to Samsung, and then contacted the Chinese company after their sales fell.
Toptec has grown fast by supplying a large amount of 3D lamination equipment to Samsung Display. The two companies maintained their partnership for a long time. Samsung Display developed the 3D lamination technology first, and then chose Toptec as the sole manufacturer for production of the equipment. Toptec’s annual sales skyrocketed from 392.6 billion won to 1.1384 trillion won from 2016 to 2017 based on the exclusive supply. Samsung Display invested 150 billion won for six years to develop the technology and produced a smartphone panel curved on all sides by further developing it.
“Those persons intentionally exported the equipment to China for profits while being aware of the fact that their deed constitutes a technology leakage,” the prosecutor’s office explained, adding, “In addition, they used personal emails and cloned phones for the organized and premeditated crime.”
The office is going to get back 100% of their criminal proceeds. Still, the technology leakage that already occurred is likely to have a significant negative impact on South Korea’s display industry. Samsung Display said its partnership with Toptec remains unchanged as in the case of the repair and maintenance of the equipment in question, adding that it is going to keep monitoring the progress of the upcoming trial and it will be very shocking if the result of the probe turns out to be true. After the news, the stock price of Toptec fell 20.17% and closed at 9,380 won per share on Nov. 29.
These days, Chinese companies are trying to steal South Korea’s technology in various ways. For example, some of them recently set up fake subsidiaries in order to circumvent the restriction for blocking a retiree from getting a job in a rival company or a partner firm for two years. BOE set up Chengdu COE Technology to steal Samsung Display engineers specializing in mobile OLED panel technology. Moreover, it is said that a private equity fund has been formed in China for semiconductor technology acquisition and semiconductor equipment and material supplier takeover.