US Justice Dept. says Chinese agents stole GE, Micron technology secrets

A former General Electric engineer and a Chinese businessman were indicted Apr 18, 2019 on charges of economic espionage and conspiring to steal the U.S. company’s trade secrets related to gas turbine technologies, according to the Justice Department.  The two passed on the stolen trade secrets, knowing it would benefit the Chinese government, the department said.

GE Power and Water

Xiaoqing Zheng, 56, was a former employee of GE Power and Water in Schenectady, New York. He allegedly emailed and transferred files involving design models, engineering drawings, configuration and material specification of GE gas and steam turbines to Zhaoxi Zhang, 47, in China, the department said.

They allegedly used the stolen information to further their business interests in two Chinese companies that produce turbine parts.

Zheng and Zhang allegedly received funding and other support from the Chinese government through these two companies and talked with government officials regarding the use of the stolen information for Chinese state-owned institutions.

The indictment “alleges a textbook example of the Chinese government’s strategy to rob American companies of their intellectual property and to replicate their products in Chinese factories, enabling Chinese companies to replace the American company first in the Chinese market and later worldwide.”

According to the “Made in China 2025” initiative announced by the govenment of the People’s Republic of China (the “PRC” or “China”) in 2015, the PRC seeks to enhance the country’s innovation, productivity, quality, digitalization and efficiency. The Made in China 2025 initiative targets ten sectors, including aerospace, aviation equipment, and power generation. Additionally, the PRC’s Thirteenth Five-Year Plan listed aviation engines and gas turbines as a major project for 2030,including research on materials and manufacturing processes. Gas turbines that power aircraft are central to the development of the aviation industry in the PRC.

Micron Technology

The Justice Department unsealed charges on Nov 1, 2018 against a Chinese state-owned firm and its Taiwan partner for allegedly stealing trade secrets from the U.S.’s largest memory-chip maker,Micron Technology Inc. The indictment, announced alongside a wide-ranging U.S. initiative to combat Chinese national security threats, is the latest in a flurry of charges targeting alleged Chinese technology theft.

A federal grand jury indicted a state-owned enterprise of the People’s Republic of China (PRC), a Taiwan company, and three individuals, charging them with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company for the benefit of a company controlled by the PRC government. All of the defendants are charged with a conspiracy to commit economic espionage, among other crimes.

The case, which follows related criminal charges filed by Taiwanese authorities last year, charges United Microelectronics Corp. , a Taiwan semiconductor foundry that is publicly traded on the New York Stock Exchange; Chinese state-owned Fujian Jinhua Integrated Circuit Co.; and three Taiwan nationals.

According to the indictment, one of the defendants was a former Micron employee in Taiwan who moved to UMC in 2015 and recruited the two other individuals who were charged to join him and bring Micron’s trade secrets with them. The alleged ringleader arranged for UMC to partner with Jinhua, where he then went to work, to develop the same technology, the indictment says.

The unsealing of the indictment, obtained in September and made public Thursday, comes just days after the Commerce Department dealt a potentially fatal blow to Jinhua by barring exports and transfers of U.S.-origin technology to the firm, which depends on the technology to produce its own chips. Jinhua, a startup backed by $5.7 billion in state funds, is a key part of China’s plan to build a world-class semiconductor industry and wean itself off a dependence on foreign technology.

With a mix of cyberattacks and on-the-ground recruiting, Beijing’s corporate raiding costs the U.S. economy hundreds of billions of dollars annually, according to some government estimates. FBI officials say the agency has active economic espionage investigations leading back to China in all 56 FBI field offices that span nearly every industry and sector.

Sources:

https://asia.nikkei.com/Business/Companies/US-says-former-GE-engineer-stole-secrets-for-Beijing

Indictment of Zheng and Zhzng
https://www.justice.gov/opa/press-release/file/1156521/download

https://www.wsj.com/articles/u-s-accuses-two-firms-of-stealing-trade-secrets-from-micron-technology-1541093537

https://www.justice.gov/opa/pr/prc-state-owned-company-taiwan-company-and-three-individuals-charged-economic-espionage

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