Korea urged to better protect key technologies

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National Assembly asked to update relevant clauses for Korea's 'sustained' national security effort

By Kim Bo-eun, Kim Yoo-chul

There have been growing calls for Korea to take a more detailed regulatory approach to preventing illicit transfer of core technologies involving semiconductors, electric vehicle batteries and displays, which are being considered key technologies of national importance.

The calls came as Korea is lagging behind in attempts to update its legislation to support its own strategic industries that underlie advanced technologies that could become the engines of economic growth and prosperity, including driverless electric vehicles (EVs), quantum computing and AI.

The United States and other countries have supported legislation and moves to revitalize their respective manufacturing of chips and batteries, in efforts to stabilize their supply chains and prevent their technologies from falling into the hands of rival national or corporate interests.

Governments around the world are stepping up their efforts for domestic protection of various technologies key to their respective economic vitality, as technology theft has become rampant. Taiwan has revised relevant regulations to require government approval when workers of core technology sectors pursue careers in China.

Korea's lawmakers are also seeking to revise related regulations, to give the government a greater say in the sale to foreign entities of domestic firms belonging to crucial tech sectors, and to make it more difficult for personnel in key research roles to leave for positions offered abroad. These moves are ongoing, as existing regulations have proven to be ineffective in protecting local technologies, especially in the case of workers moving away to foreign firms.

Some employees at the country's top-tier companies have been arrested for allegedly trying to leak advanced technologies for OLEDs to China in violation of the Industrial Technology Protection Act.

Given Korea's edge over China in EV batteries, displays and semiconductors, Chinese companies have actively been hiring researchers away from Korean companies involved in these segments in particular. Headhunters of Chinese firms reach out to employees at Korean companies by visiting websites containing their online profiles, and contacting them with job offers promising high salaries.

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"Korea's intelligence officials have acknowledged that the so-called brain drain is increasing in the fields of chips, EV batteries and displays. Now is the time for the National Assembly to update relevant clauses giving the country a sustained and comprehensive national security effort," one ranking intelligence source said, Monday.

He urged South Korea to take seriously issues related to the availability and security of supply chains for EV batteries, displays and semiconductors, and to bring an increased level of attention and commitment to these technologies just as the United States has. "Or, Korea may find itself situated precariously in the near future," he warned.

Employees would naturally want to move to rival companies offering greater compensation packages, and often these companies make offers that go beyond what Korean employers are offering to domestically based workers. The government is seeking to enable retiring and retired workers with knowledge of core technologies to join state research institutions, in a bid to disincentivize them from joining foreign firms.

"Usually, those leaving a company are those who have failed to earn a promotion and have possibly developed a grudge," an industry official said. "The level of compensation is also enticing given Chinese entities offer up to five times as much pay. This means they will be able to earn in one year what they would earn in five years here. This is undeniably a huge incentive."

Complicated issue

Existing regulations ban a company employee with core technology know-how from moving to another firm of the same sector within two years of leaving their previous workplace. However, investigative authorities have dropped many of these cases, as the ban on moving to another firm violates the freedom of employment guaranteed under the Constitution.

Workers found to have leaked classified documents are subject to a prison term or fine. Movements are ongoing to strengthen the penalties for employees leaking trade secrets, but industry insiders say beefing up regulations will have little effect.

"Workers leaving a company find a way to circumvent regulations, such as by moving to a partner firm or paper company that does not qualify as a company of the same sector," an industry official said.

"Also, workers are only penalized when they are found to have leaked documents, but in many cases they are transferring technology without having to hand over documents as they are familiar enough with the details."

Despite Korea's efforts at strengthening penalties for illicit transfer of trade secrets, cases of corporate espionage haven't been letting up. More than 170 cases of technology leaks were found here between 2015 and last year, intelligence sources said. The most common scenario involved leaks to China, many of which involved technologies in EV batteries, chips and displays ― segments in which South Korean companies are fighting to hold onto their competitive lead.