Updated: Applied execs arrested for leaking Samung process details to Hynix

LONDON — Prosecutors in Seoul, South Korea, have arrested two executives from U.S. semiconductor equipment maker Applied Materials Inc. (Santa Clara, Calif.) alleging they stole Samsung process technology details and passed them on to Hynix, according to local reports.

In a filing with the U.S. Securities and Exchange Commission (SEC) on Wednesday (Feb. 3), Applied confirmed the report. ''Applied has learned that the people indicted and/or arrested include the former head of Applied Materials Korea (AMK), who currently serves as a vice president of Applied, and certain other AMK employees,'' according to the filing.

The filing did not disclosed the exact identities. ''We are not disclosing the names of our employees as they were not disclosed by the Seoul Prosecutor's Office,'' according to a spokesman for fab tool maker Applied, in a e-mail.

The information stolen included manufacturing process technology details for DRAMs and NAND flash memory as well as investment plans for chip production, which were passed on to Hynix Semiconductor Inc., the reports said.

The identity of the indicted executives is not clear. One is identified by his family name as Kwak, according to a Korea Herald report. The other is said to be an official at the South Korean subsidiary of Applied Materials. A Hynix executive identified by family name Han was accused of receiving the stolen information, the report said.

The information was passed to Hynix between March 2005 and December 2009 and has cost Samsung more than $100 million, the report said. Hynix said the leaked information could not have been used in its chip-making process, the reports said.

"This case reveals that while memory chip makers have maintained tight security against competitors, business partners like equipment companies have had relatively easy access to trade secrets," a Yonhap report quoted an official at the prosecutor's office as saying.

In a filing, Applied confirmed the report, but the fab tool giant defended its record in Korea. ''Applied Materials Inc. has learned that the Seoul Prosecutor's Office for the Eastern District in Korea has taken certain actions in connection with its criminal investigation into the alleged improper receipt and use of a customer's confidential information,'' according to the filing.

''Applied believes that there are meritorious defenses to the charges and is taking appropriate measures to address this matter,'' according to the filing.

''Applied has strict policies in place to protect the intellectual property of its customers, suppliers, competitors and other third parties, and takes any violation of these policies seriously. Applied is committed to upholding high ethical standards in its workplace and business dealings. For 25 years, Applied has supplied its customers in Korea with technology-leading products and services. Applied is proud of this long history and has taken steps to provide continuity of leadership at AMK,'' according to the filing.

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