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USA charges Chinese companies in trade secrets theft

03 November 2018

USA officials says the defendants, including a Chinese-owned company singled out this week by the Trump administration, targeted Idaho-based Micron over a technology it produces that stores memory in electronics. Fujian Jinhua was founded in 2016 for the sole objective of developing DRAM technology. Chen worked for Micron before joining UMC, and "arranged a cooperation agreement between UMC and Fujian Jinhua", according to the indictment.

Last week, the Commerce Department imposed sanctions on Fujian Jinhua.

The stolen secrets revolve around Dynamic Random Access Memory technology - which these Chinese companies did not have until the data theft, prosecutors said. A Justice Department spokesman said the defendants were served summonses in Taiwan and that none is in US custody.

The indictment alleges that the companies and the three individuals conspired to steal trade secrets from Micron, a U.S. semiconductor company worth $100bn (£76bn).

The indictments come in the midst of an American-initiative trade war that has led so far to the Trump administration imposing import tariffs on $250 billion of Chinese goods, based on previous year's imports.

US Attorney General Jeff Sessions announced the indictment, which also names three Taiwan nationals, in Washington yesterday.

"UMC regrets that the U.S. Attorney's Office brought these charges without first notifying UMC and giving it an opportunity to discuss the matter", the company said.

"The reciprocal trading system that has existed between the US and China can endure only on the basis of mutual respect for the rule of law, including fair trials and the enforcement of property rights".

The program will identify priority Chinese trade theft cases and see that they have enough people and funds and that they get high-level support.

"We are not just reacting to crimes - we are acting to block the defendants from doing any more harm to Micron", Sessions said.

The department has filed a civil suit against the two companies as well.

China said on Friday the United States should present evidence to back up its charges.

That man, identified by prosecutors as Chen Zhengkun (known in English as Stephen Chen), recruited both of his co-defendants to join him at UMC. According to the indictment, Micron maintains a significant competitive advantage in this field due in large part from its intellectual property, including its trade secrets that include detailed, confidential information pertaining to the design, development, and manufacturing of advanced DRAM products.

The action is the latest in a long list taken to fight what some in the Trump administration call China's cheating through intellectual property theft, illegal corporate subsidies and rules hampering USA corporations that want to sell their goods in China. Ltd., a Chinese state-owned company; United Microelectronics Corp.

Congress in August passed the Foreign Investment Risk Review Modernization Act to expand the government's power to review investments from foreign countries - a response to China's efforts to obtain USA technology through mergers, acquisitions and takeovers.

The Chinese government, Sessions said, was "notorious around the world" for intellectual property theft. It wants to keep working with China without sharing key technologies. The US has taken an increasingly tough and confrontational stance toward what it characterizes as China's "predatory" economic policies.

USA charges Chinese companies in trade secrets theft