Heavy! Paying $60 million, United announced a settlement with the United States! "Stop" Jinhua?

Release time:

2020-10-31

Fujian Jinhua still "shut down", living on blood transfusion?

Shandong Huake learned that on October 29, Liandian, a large foundry factory, announced that the Federal District Court of Northern California had approved the settlement agreement between Liandian and the US Department of Justice. The U.S. Department of Justice will drop the charges against United, and United will pay a fine of $60 million to the U.S. Department of Justice. The two-year case of United Power's alleged theft of Micron secrets has finally settled.

According to the contents of the announcement, the U.S. Department of Justice agreed to drop the charges against United, including conspiracy to commit economic espionage, conspiracy to steal multiple Micron (Micron Technology, Inc.) business secrets, and Patent-related charges, as well as damages and fines that may range from $0.4 billion to $8.75 billion. Liandian admitted to violating a trade secret, agreed to pay a fine of $60 million to the U.S. government, and cooperated with the U.S. Department of Justice during a three-year self-administered probation period.

In February 2016, Fujian Electronic Information Group and Jinjiang Energy Investment Group Co., Ltd. jointly funded and established a dynamic random access memory (DRAM) manufacturing enterprise, Fujian Jinhua Integrated Circuit Co., Ltd. (hereinafter referred to as "Fujian Jinhua"). Specifically, it was funded by Fujian Jinhua and commissioned Liandian to develop DRAM-related technologies. According to public information, Jinhua provided US $0.3 billion to purchase research and development equipment, and paid Liandian US $0.4 billion in succession according to the progress. The technical achievements developed were shared by both parties. After the overall technology was completed, it was transferred to Jinhua for mass production.

In May 2016, Liandian signed a cooperation agreement with Fujian Jinhua with the approval of the Investment Review Committee of the Ministry of Economic Affairs of Taiwan. According to the agreement, Liandian and Jinhua jointly developed two generations of dynamic random access memory (DRAM) process. The DRAM process developed in the agreement is not the latest technology, but an old technology similar to that used in mass production in 2012.

According to the plan, the manufacturing technology of Fujian Jinhua will be mainly carried out by Liandian. The first phase of the overall Jinhua project will cost a total of US $5.3 billion and will be officially put into production in the third quarter of 2018. At that time, the monthly production capacity of 12-inch wafers with 32 nm process will be introduced, which is expected to reach the scale of 60000 wafers. The company aims to eventually launch a 20-nanometer product, with a planned monthly production capacity of 240000 pieces by 2025.

In February 2017, Chen Zhengkun, senior deputy general manager of Liandian, became the general manager of Jinhua Integration. However, in September 2017, Mekong sued Liandian in Taiwan, accusing employees who changed jobs from Mekong to Liandian of stealing Mekong's DRAM trade secrets and allegedly leaking Mekong's DRAM technology to Liandian to help Liandian develop 32nm DRAM.

In December 2017, Micron sued Jinhua and Liandian in a federal court in California, claiming that Liandian stole its intellectual property rights, including key technologies for memory chips, through its employees in Taiwan and delivered them to Fujian Jinhua.

On January 19, 2018, Jinhua filed a lawsuit against Micron for the infringement of a series of products sold by Micron in China, and filed a complaint with the Fuzhou Intermediate People's Court on the same day, requesting that Micron immediately stop infringing on Jinhua's patents. And requested compensation of RMB 0.196 billion.

On July 3, 2018, the Fuzhou Intermediate People's Court ruled that Micron Semiconductor Sales (Shanghai) Co., Ltd. immediately stopped selling and importing more than ten Crucial Yingruida SSDs, memory chips and related chips, and deleted the above-mentioned products from its website. Information such as advertisements and purchase links. At the same time, it was ruled that Meguang Semiconductor (Xi'an) Co., Ltd. immediately stopped manufacturing, selling and importing several memory chip products.

On October 19, 2018, Chen Zhengkun, general manager of Jinhua Integration, entered the country from Taoyuan Airport and received a US federal court subpoena from an official of Taiwan's "Ministry of Justice" entrusted by the US Department of Justice.

On October 30, 2018 (October 29, U.S. time), the U.S. Department of Commerce announced that it would implement export controls on Jinhua Integration from October 30 on the grounds of national security, and was included in the U.S. export control "entity list" Chinese enterprises. At the same time, Liandian said that the cooperation plan integrated with Jinhua will not be affected and will continue to develop technology in accordance with the contract.

On October 31, 2018, Liandian announced that it had received a letter from the "International Trade Bureau" forwarded by the Taiwan Electrical and Electronic Industry Association, hoping that Liandian would cooperate with the requirements of the US Department of Commerce and control the Jinhua contract. After evaluation, the senior management of Liandian decided to suspend the cooperation with Jinhua Integration, and then negotiate with Jinhua Integration on the follow-up cooperation matters when the whole matter is settled.

On November 1, 2018, the U.S. Attorney's Office for the Northern District of California sued Jinhua Integration and United Power in criminal proceedings for conspiring to steal Micron's trade secrets. The indictment also pointed out that the three Taiwanese men involved in the case were Chen Zhengkun, He Jianting (transliteration) and Wang Yongming (transliteration). All three men had worked for Micron and were suspected of stealing Micron technology when they joined Liandian.

In June this year, the Taichung District Court also pronounced a verdict on the case of Micron suing Liandian for stealing trade secrets. He Jianting was sentenced to 5 years and 6 months in prison with a fine of NT $5 million; Wang Yongming was sentenced to 4 years and 6 months with a fine of NT $4 million; United Power Associate Rong Lotte was sentenced to 6 years and 6 months in prison with a fine of NT $6 million; United Power was sentenced to a fine of NT $0.1 billion, but can still appeal to the Intellectual Property Court.

It is worth noting that in June this year, the Taichung District Court also pronounced a verdict on the case of Meiguang suing Liandian for stealing trade secrets in September 2017. He Jianting was sentenced to 5 years and 6 months in prison with a fine of NT $5 million; Wang Yongming was sentenced to 4 years and 6 months with a fine of NT $4 million; United Power Associate Rong Lotte was sentenced to 6 years and 6 months in prison with a fine of NT $6 million; United Power was sentenced to a fine of NT $0.1 billion, but can still appeal to the Intellectual Property Court.

Liandian said it did not violate the business secrets law and will appeal the guilty verdict and high fine in accordance with the law.

Subsequently, the San Francisco court issued an arrest warrant on June 24, local time, including three suspects suspected of stealing the commercial secrets of the US storage factory Micron DRAM technology on the wanted list. One of them was Chen Zhengkun, general manager of Fujian Jinhua, and the other two were He Jianting and Wang Yongming.

Although, the above three Liandian employees are believed to have stolen the trade secrets of Micron's DRAM technology. However, Liandian argued that it did not allow any employee to bring former company information to Liandian for the DRAM cooperation case, and that it had a number of policies and measures to protect and prevent business secrets between itself and others. However, two former employees of Meiguang, Taiwan, China, who participated in the DRAM cooperation case violated the employment contract and declaration signed with Liandian and brought former company information into Liandian for reference in their work. When it becomes aware of the above, it immediately takes necessary measures to confirm that the developed process technology does not contain any unauthorized information. The first generation DRAM process technology mentioned in the cooperation agreement was transferred to Jinhua in September 2018. Liandian has no intention and has not transferred any unauthorized information to Jinhua.

However, according to the U.S. Business Secrets Protection Act, even if an employee violates company policy without the knowledge of the company's top management, the company is still legally responsible for the employee's behavior. This is why, in the settlement agreement to recognize and accept the responsibility caused by employee contact.

In response to the settlement agreement, Hong Jiacong, chairman of Lianhua Electronics, said:

As one of the companies leading the development of the semiconductor industry in Taiwan, UMC has been continuously developing semiconductors and other technologies for 40 years, and plays a pivotal role in the global semiconductor supply chain. More than 1/3 of UMC's revenue comes from the United States and has long-term business relationships with American customers and suppliers. More recently, UMC has partnered with U.S. companies to produce the semiconductor chips in the respirators needed to fight the new coronary pneumonia. A few years ago, UMC obtained prior approval from the government to participate in the DRAM cooperative development case with its own professional knowledge and experience, as well as rich R & D resources. When UMC executives discover employee misconduct, they take immediate action, including an internal investigation, and prevent any unauthorized use or outflow of information.

In view of this, Liandian will continue to implement and strengthen policies and measures related to the protection and exemption of business secrets, including the supervision mechanism of confidential information, education, training and audit of intellectual property protection, etc., to ensure that daily operations are in line with the company's intellectual property rights and financial security protection policies.

We are pleased that we have reached an agreement with the US government. In the future, the company will continue to provide competitive products and services in various fields.

Fujian Jinhua still "shut down", living on blood transfusion?

Although UMC has reached a settlement with the US Department of Justice, Fujian Jinhua is still in suspension under US sanctions.

In October 2018, after the United States included Fujian Jinhua in the entity list, Fujian Jinhua issued an announcement in response, saying, "The company has always firmly followed the independent research and development route, and has continuously increased investment to carry out the research and development and manufacturing of memory-related products, and has achieved a number of patent results. Jinhua has always attached importance to the protection of intellectual property rights, and there is no theft of other companies' technology."

On January 25, 2019, Fujian Jinhua Integrated Circuit Co., Ltd. ("Jinhua") once again issued an official statement stating that it had submitted a letter to the End User Review Committee of the U.S. Department of Commerce, stating that the company was prepared to submit a formal complaint requesting removal from the U.S. Department of Commerce. Entity list. Jinhua clarified that the company does not pose a risk to the national security of the United States, and said that the company has always complied with U.S. laws.

However, with the conviction of Chen Zhengkun, general manager of Fujian Jinhua, He Jianting and Wang Yongming in Taiwan, and Liandian's admission of infringement of Micron's trade secrets and payment of US $60 million to reach a settlement with the US Department of Justice, it is obvious that Fujian Jinhua wants to win the US lawsuit. It is impossible, so "lifting the ban" is even more hopeless.

In October 2018, after being sanctioned by the United States, Fujian Jinhua immediately fell into a shutdown. Hundreds of equipment that had entered the site became "scrap iron", and the technical partner Liandian has also suspended cooperation.

Although in May last year, the Financial Times website quoted people familiar with the matter as saying that Fujian Jinhua was seeking a deal with a foreign semiconductor company (said to be Micron). The foreign semiconductor company is willing to provide the technology and expertise needed to operate a chip manufacturing plant in exchange for the use of the factory. However, Jinhua denied the news, saying that "the content of the report is untrue and pure fabrication. The company has no sales plan and has not sought Micron's help".

Now, after more than two years of litigation, Liandian has successfully broken out of the quagmire. However, Fujian Jinhua is still difficult to ride a tiger. If you choose to give up, the tens of billions of yuan (according to the plan, the total investment in the first phase of the project is 5.3 billion US dollars) will be wasted, but if you don't give up, you can't continue to do DRAM. Technology and equipment have been restricted. However, it is not a way to do it just like this. Where will it go in the future?

It was noted that on September 15 this year, Fujian Jinhua also changed its shareholders, adding "Fujian Tongxin No.1 Integrated Circuit Industry Venture Capital Partnership (Limited Partnership)" as a shareholder. At the same time, the registered capital also increased from 11444.825 million yuan to 13490.3949 million yuan, an increase of 17.35.

According to industrial and commercial data, the actual controller of "Fujian Tongxin No. 1 Integrated Circuit Industry Venture Capital Partnership (Limited Partnership)" is Fujian SASAC. Is this continuing to give Jinhua "blood transfusion"?

In addition, according to the financial report information of Fujian Jinhua in the eye check, the number of insured employees in Fujian Jinhua increased to 979 in 2018 and 1010 in 2019. Fujian Jinhua, which fell into a standstill under the US sanctions, did not have layoffs, but the number of employees increased. Why? Is Fujian Jinhua seeking to transform and develop new businesses? However, from the current information in the industry, Jinhua does not seem to have any new initiatives.

(Source Today Semiconductor)

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