U.S. Accuses Chinese Firm, Partner of Stealing Trade Secrets From Micron -- Update

By Aruna Viswanatha, Kate O'Keeffe and Dustin Volz

U.S. authorities accused a Chinese state-owned firm, its Taiwanese partner and several individuals of stealing trade secrets from America's largest memory-chip maker, Micron Technology Inc., according to an indictment unsealed Thursday.

The indictment is the latest in a flurry of charges targeting alleged Chinese technology theft as the Trump administration takes an aggressive stance against Beijing.

The criminal defendants named in the indictment are 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.

Attorney General Jeff Sessions also criticized China on Thursday, saying it was violating an accord reached with the Obama administration under which both governments agreed not to support cyberattacks to steal corporate secrets from one another.

"In 2015, China committed publicly that it would not target American companies for economic gain," Mr. Sessions said. "Obviously, that commitment has not been kept."

Representatives for Jinhua, UMC and Micron didn't immediately provide comment, nor did the Chinese Embassy in Washington, D.C. It wasn't immediately clear who would represent the individuals charged.

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.

Also on Thursday, Mr. Sessions announced a new "China initiative" to better combat theft of trade secrets, bribery, illegal foreign lobbying and business deals that could give foreign investors access to critical U.S. technology.

Mr. Sessions said a new working group of Justice Department officials, including the top federal prosecutors from districts in California, Texas and other states, would increase law-enforcement engagement with U.S. universities, where the Justice Department believes Chinese Communist party initiatives target technology and threaten academic freedom.

U.S. officials have stepped up pressure on Beijing over what they describe as a wide-ranging campaign to interfere in U.S. affairs and to improperly obtain critical U.S. technology from American businesses. Earlier this week, federal prosecutors unsealed charges against two Chinese intelligence officers and eight others who allegedly worked with them on a yearslong campaign to steal information about a commercial aircraft engine being developed by two U.S. and French firms.

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. Last month, FBI Director Chris Wray said his agency had active economic espionage investigations leading back to China in all 56 FBI field offices that spanned nearly every industry and sector. Mr. Wray has described China as the Federal Bureau of Investigation's top counterintelligence priority.

"We will confront China's malign behaviors and encourage them to conduct themselves as they aspire to be: one of the world's leading nations," the head of the Justice Department's national security division, John Demers, said.

The sharp rhetoric from senior Justice Department officials contrasted with President Trump's description of a "long and very good call" earlier Thursday with Chinese President Xi Jinping, on topics including trade and North Korea.

The Justice Department action against UMC and Jinhua comes after Micron in December sued the companies in a federal court in California, alleging they stole its talent and trade secrets. Jinhua contests the claim and the case is continuing.

Jinhua then sued Micron in January in a court in China's Fujian province -- whose government partly controls Jinhua -- and won a temporary order blocking some Micron units from selling products in China on which each company claims patents. Micron has said Jinhua's suit was a bogus retaliation measure and has criticized Beijing over its treatment.

Thursday's allegations ad ded to a growing consensus that China is in violation of the 2015 bilateral pact between Mr. Xi and then-President Obama on cybertheft, though officials said they didn't view the Micron case specifically as a cyber matter. U.S. intelligence officials and several private-sector cybersecurity firms believe the accord led to a real decline in Chinese espionage, but that the malicious activity has returned since Mr. Trump took office as hostilities over trade and other issues have escalated.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com, Kate O'Keeffe at kathryn.okeeffe@wsj.com and Dustin Volz at dustin.volz@wsj.com

(END) Dow Jones Newswires

November 01, 2018 14:39 ET (18:39 GMT)

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