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South Korea just made stealing chip secrets a lot more expensive. The country’s revised Criminal Act took effect on September 13, expanding the definition of espionage beyond “enemy states” to cover any foreign country or organized entity, with prison sentences ranging from three to 30 years.
The old law, untouched for over seven decades, essentially treated espionage as a North Korea problem. The new version acknowledges a reality that South Korean chipmakers have been living with for years: the threat to their semiconductor crown jewels comes from multiple directions.
A record wave of leaks forced the issue
The timing isn’t coincidental. In 2025, South Korean police reported a record 33 technology leak cases, with more than half linked to China. The semiconductor sector was the primary target.
One case stood out above the rest. Five former Samsung Electronics employees were indicted for allegedly transferring critical DRAM manufacturing technology to ChangXin Memory Technologies, a Chinese memory chip firm known as CXMT.
Samsung and SK Hynix together dominate the global memory chip market, controlling vast shares of both DRAM and NAND flash production.
The revised law was passed on February 26, 2026, and legislators gave roughly six months before it went live.
What the law actually changes
Under the previous framework, prosecutors had a narrow lane. Espionage charges required the involvement of an “enemy state,” which in practice meant North Korea. If a Chinese firm recruited a Samsung engineer to bring over process blueprints, the legal toolkit was surprisingly limited. Prosecutors often had to rely on trade secret statutes that carried lighter penalties and less deterrent force.
The revised Criminal Act removes that constraint entirely. Anyone who obtains, collects, or discloses state secrets on behalf of any foreign entity now faces a minimum of three years behind bars. The maximum penalty stretches to 30 years.
The law also reflects a broader philosophical shift. South Korea is no longer treating technology theft as a corporate dispute between private parties. It’s treating it as a national security matter, which changes the resources, investigative powers, and political will that get deployed.
The $880 billion bet behind the legal shield
This legislative move is one piece of a much larger strategy. South Korea has outlined an $880 billion semiconductor hub plan designed to cement its position as a global chipmaking powerhouse for decades to come.
The National Intelligence Service has been particularly vocal about the risk. South Korean intelligence officials have flagged concerns about technology outflows that could erode the competitive advantages of domestic firms at exactly the moment when global demand for advanced memory chips is surging.
China’s domestic chip ambitions add urgency. Firms like CXMT and Yangtze Memory Technologies, known as YMTC, have been aggressively building capacity in the memory space. While US export controls have slowed their access to the most advanced manufacturing equipment, human capital and process knowledge represent an alternative pathway to closing the technology gap.
What this means for the global chip landscape
There’s also the diplomatic dimension. China is unlikely to view this law as a neutral legal reform. Given that over half of the reported leak cases were linked to Chinese entities, Beijing may interpret the legislation as targeted, potentially adding another friction point to an already complicated bilateral relationship in the technology sphere.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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