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After first floating $20bn penalty, DoJ suggests $60m fine for UMC's theft of Micron’s DRAM secrets

Taiwanese chipmaker promises ‘substantial assistance’ in ongoing China IP theft action

Taiwanese chip-maker United Microelectronics Corporation (UMC) will plead guilty to theft of trade secrets from Micron Technologies and pay a $60m fine to the USA.

The case was brought in 2018 when the US Department of Justice (DoJ) alleged that UMC and Chinese outfit Fujian Jinhua Integrated Circuit conspired to steal Micron’s DRAM technology, including details of manufacturing processes, in order to start their own DRAM business. It’s alleged that those documents came from three former Taiwan-based Micron staffers who went to work on the joint UMC and Fujian project.

UMC and Fujian gave the game away when they applied for patents on their own DRAM tech that bore eerie resemblance to Micron’s own documentation. The three workers have since been found guilty of the theft in Taiwan and charged by US authorities.

The DoJ acted against UMC under its "Initiative to Combat Chinese Economic Espionage", a Trump administration programme that aims to protect American intellectual property and lets the US government enforce forfeitures and fines.

Documents filed with the court hearing the case on Thursday now reveal that UMC [PDF] and the DoJ [PDF] have struck a deal that will see the Taiwanese company fined $60 million but provide “substantial assistance” in ongoing investigations.

“UMC will plead guilty for a serious crime, which deprived Micron of exclusive use and control of its valuable intellectual property in a competitive industry,” the DoJ filing says. “For those reasons, the government respectfully asserts that a sentence of a $60 million fine is sufficient but not greater than necessary to comply … and respectfully requests the Court to impose that sentence.”

$60m is, however, rather less than the $20billion the DoJ mentioned as a potential fine when it announced the action against UMC and Fujian. The DoJ deems the sum to be in the “midpoint” of fines available to it, and therefore reasonable.

Why the seemingly lenient fine?

US companies are now only permitted to export their technology to China with a licence, a policy designed in part to hurt Chinese silicon foundries. The USA is courting Taiwanese companies as an alternative, a policy that will ensure continuity of supply and has the helpful side benefits of boosting an ally that is a democracy and usefully close to China should the US/China rivalry go from trade and ideological conflict to more kinetic confrontation.

UMC’s FY 2019 revenue was $5.1bn, so a $60m fine won’t be an enormous discomfort.

As the filings from both the DoJ and UMC suggest the $60m fine as reasonable, it is likely the court will sign off on that sum. UMC has made a regulatory filing that says it has adjusted its books to reflect its belief the matter will settle with a $60m fine. ®

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