Chinese chipmaker to stand trial for technology theft charges set in motion by Trump’s ‘China Initiative’

Chinese tech firm Fujian Jinhua Integrated Circuit Co. is going to trial after the U.S. government blacklisted the company for allegedly stealing technology from a semiconductor producer in Idaho over three years ago.

The chip manufacturer is expected to appear in court on Monday in San Francisco to fight allegations of economic espionage and conspiracy to steal trade secrets from Micron Technology Inc., reports Bloomberg.

The case was inherited from former U.S. President Donald Trump’s administration as a result of its controversial “China Initiative,” an anti-espionage program that President Joe Biden’s administration ended last week.

The results of the case will be crucial in determining whether the government-backed company is able to advance China’s expansion efforts in semiconductor manufacturing, according to Bloomberg.

Jinhua’s case involves its full-scale local production of the dynamic random access memory (DRAM), part of China’s effort to end chip imports that amount to around $380 billion each year.

The U.S. reportedly filed the criminal case against Jinhua in 2018 and placed it on the Commerce Department’s “Entity List,” preventing it from buying chip-making equipment from suppliers who are mostly based in the U.S. Following this, chip suppliers and engineers from both the U.S. and the U.K. started pulling out from Jinjiang, Jinhua’s base of operations.

Experts point out that even if it were to win its case, Jinhua, which has pleaded not guilty to both charges, will likely still face challenges to its production and retain a negative reputation in the eyes of the U.S. government.

Prosecutors have claimed that Stephen Chen, Jinhua’s president at the time, maneuvered the illegal transfer of Micron’s memory design in a chip manufacturing deal between Taiwan’s United Microelectronics Corp. (UMC) and Jinhua, according to Bloomberg.

Chen and two other Taiwanese engineers who moved from Micron to UMC are all charged in the case. While warrants for their arrest were issued in 2020, they have not appeared on trial, since the U.S. does not have extradition treaties with Taiwan or China.

In 2020, UMC pleaded guilty to trade-secret theft and paid a $60 million fine. As part of the deal, the economic espionage and conspiracy charges against the company were dropped and it agreed to cooperate with the government’s investigation of Jinhua.

Jinhua said in their filings that the U.S. has yet to produce any form of agreement that shows UMC and Jinhua stole information.

“Despite UMC’s full cooperation and the government’s free access to UMC’s documents since it pled guilty more than a year ago, the United States has not identified a single document, email, or witness statement among the over six million documents produced to date reflecting an agreement between UMC and Jinhua to steal or improperly obtain Micron confidential information,” the filings read.

U.S. District Judge Maxine Chesney, who considers Chen a pivotal person in the trial, said prosecutors need to prove that Chen was involved in the alleged theft or use of Micron’s trade secrets.

Featured Image via Christian Ibarra

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