Avoiding Semiconductor Intellectual Property Theft

Protecting against intellectual property theft has been a growing concern for some time now, particularly in the USA where many companies have fallen victim to foreign actors stealing their ideas and technologies. Because the semiconductor industry is so innovative, regularly vying with pharmaceuticals and biotech for this title of most innovative, the value of the intellectual property (IP) has gone up. 

Recent examples of IP theft in the semiconductor industry are numerous. Taiwanese manufacturer UMC and state-owned Chinese company Fujian Jinhua were fined $60 million (SD) after pleading guilty to stealing trade secrets from US chipmaker Micron Technologies. On occasions, there have been individuals as opposed to companies indicted; for example, a Chinese national was found guilty of stealing trade secrets from two US semiconductor companies, Avago and Skyworks, and passing them on to Tianjin University to help them build a new semiconductor fabrication plant. These and various other examples of theft of IP were instrumental in the US decision to impose sanctions on China and Taiwan.

There is also the issue of forced technology transfer, a policy China has promised to rein in, but continues to insist on, that is driving a wedge between itself and its trading partners. The policy, unofficial or otherwise, states that in return for access to markets, China demands that foreign companies reveal their technology secrets. Many European and US companies claim they have been compelled to do so. In many cases, this forced technology transfer occurs in joint ventures – foreign companies working in tandem with domestic companies and being obliged to share patents, trademarks, copyright and trade secrets. While companies are not forced to enter into these joint ventures, the economic imperative to gain access to the World’s second largest economy, is often too great a pull for many.

As a result of ongoing IP theft, governments and companies have come together to propose new means for defending trade secrets and tightening existing intellectual property frameworks to reduce a risk of theft of IP arising. Measures proposed to prevent theft so far have included increasing penalties and sanctions for the revealing of trade secrets, greater international cooperation between market leaders in cybersecurity and the beefing up of patent offices and other IP bodies. 

But are these new means for defending trade secrets enough?

According to the CNBC Global CFO council, representing some of the largest US companies in various sectors, it is found that 1 in 5 of US companies has been a victim of IP theft at the hands of Chinese companies or state-owned enterprises and this is, according to the US IP Commission, costing $600 billion (USD) annually to the US economy. As a result, relations between the two superpowers are mired in mutual distrust and a lack of cooperation that will only hurt future innovation in the semiconductor industry.

This was an extract from Aalbun's latest white paper – Semiconductors: Innovation and Intellectual Property Rights. To read the full white paper, click here.


manage cookies