South Korea arms itself to protect chip secrets from foreign spies

South Korea is arming itself against industrial spies targeting its world-leading semiconductor industry, broadening its espionage laws for the first time in more than seven decades as Chinese rivals close the technology gap.

From Sunday, those who steal “national secrets” on behalf of foreign countries may be prosecuted as spies and could face sentences of up to 30 years in prison.

The definition covers non-public information whose disclosure could threaten national security, including in areas such as the economy and science and technology.

The amendment closes a longstanding loophole in Korean law that said only those working for an “enemy” state — a category that in practice meant only North Korea — could be found guilty of spying.

The tougher regime comes amid alarm in Seoul over technology leakage in an industry which has accounted for more than 40 per cent of the country’s exports this year and has powered economic growth during the ongoing AI boom.

On the bill’s passage into law earlier this year, justice minister Chung Sung-ho said it provided a “legal safety net” to prevent the leakage of advanced technologies

At a meeting of the Industrial Technology Protection Policy Committee last month involving the justice, science, SME and other ministries as well as police, Yang Ki-wook, a senior industry ministry official, said: “We will mobilise the full capabilities of the state, from policymaking through investigation and prosecution to sentencing, to respond sternly to technology leakage.”

The Korean National Police Agency (KNPA) last year identified a record 33 cases involving the leakage of technology overseas. More than half of them involved China. Semiconductors were the most targeted sector, the KNPA said.

Security concerns extend far beyond Samsung Electronics and SK Hynix, the two memory-chip makers at the top of Korea’s vast and complex chip supply chain.

Smaller firms supplying components and materials often have access to sensitive information too, but lack the resources enjoyed by the chaebols — family-run conglomerates such as Samsung and SK that dominate the economy — to protect it. According to the KNPA, 86 per cent of all technology leak cases last year involved SMEs.

In one case last year, police arrested a former employee of an SK Hynix supplier at Gimpo airport near Seoul, as he prepared to leave for China. They accused him of attempting to take sensitive high-bandwidth memory chip packaging technology with him.

“The thickest pipeline [for spies] is the recruitment of retired executives and senior engineers, typically offered two to three times their previous salaries,” said Kwon Seok-joon, a semiconductor expert at Sungkyunkwan University. Hiring was “routed through shell companies or consulting entities in Singapore, Taiwan or Hong Kong”, he added.

Concern has intensified as Chinese memory-chip makers have gained ground. Revenues at China’s leading DRam producer, CXMT, rose almost ninefold year on year to $22.4bn in the first half of 2026.

According to TrendForce, CXMT’s share of global DRam revenues rose from 7.6 per cent in the first quarter of 2026 to 9.5 per cent in the second, compared with 39.4 per cent for Samsung and 24.9 per cent for SK Hynix.

Last December, Korean prosecutors announced the indictment of 10 former Samsung employees over the alleged transfer of the company’s 18-nanometre DRam manufacturing technology to CXMT. One of them is believed by police to have copied down hundreds of steps from Samsung’s processes by hand before joining the company.

South Korea’s justice ministry did not respond to a request for comment. CXMT declined to comment.

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Massive state investment and improved domestic engineering were behind China’s growing semiconductor prowess, Kwon said. “China would have arrived regardless, but espionage made it arrive faster,” he said.

Under the new law, prosecutors must establish that stolen information constitutes a “national secret” and prove the required connection with a foreign state or equivalent organisation. Cases that do not meet this threshold will continue to be pursued under the Industrial Technology Protection Act, which was also strengthened in June.

Ultimately, noted Kwon: “As long as departing engineers face strong financial incentives and weak post-employment career management, the espionage-related pipeline will persist.”