United Microelectronics Corporation (NYSE: UMC; TWSE: 2303)
("UMC"), an industry-leading Taiwanese semiconductor manufacturing
company, today pleaded guilty to one count of receiving and
possessing a stolen trade secret, and agreed to pay a fine of $60
million USD.
UMC’s plea and Plea Agreement resolve a 2018 trade secrets case
brought against UMC by the U.S. Department of Justice. (“DOJ”) in
November 2018. As part of the Plea Agreement, DOJ agreed to dismiss
the original indictment against UMC, including allegations of
conspiracy to commit economic espionage and conspiracy to steal
multiple trade secrets from Micron Technology, Inc. (“Micron”),
patent-related allegations, and alleged damages and penalties of
$400 million USD to $8.75 billion USD. The one trade secret at
issue in the guilty plea and Plea Agreement related to older
technology that had been in mass production worldwide for several
years. DOJ also dismissed a related civil case against UMC. Aside
from the fine amount, UMC has no further financial obligations to
DOJ. The Plea Agreement also provides that UMC will cooperate with
DOJ and will be subject to a three-year term of non-supervised
probation.
UMC plays a significant role in the semiconductor supply chain
worldwide and in the United States in particular, from which it
derives more than a third of its revenue. UMC has long-standing
business relationships, both as a supplier and a customer, with
many well established and respected U.S. companies in the
semiconductor industry. UMC also has recently worked with two other
U.S. companies manufacturing an essential semiconductor component
for ventilators being produced by those companies in response to
the COVID-19 pandemic.
In May 2016, UMC finalized a Cooperation Agreement with Fujian
Jinhua Integrated Circuit Co., Ltd. (“Jinhua”), a Chinese company.
The Cooperation Agreement, which had been pre-approved by the
Taiwan Ministry of Economic Affairs Investment Committee, called
for UMC and Jinhua to jointly develop two generations of DRAM
process technology (the “DRAM Project”). The DRAM technology nodes
to be developed were not new, leading-edge technology; instead,
they would be similar to technology that had been in mass
production since at least 2012.
As part of the DRAM Project, UMC recruited engineers from
various companies, including Micron Memory Taiwan, Co., Ltd.
(“MMT”). UMC never requested nor expected that any former MMT
employees would bring confidential or trade secret information to
UMC. However, as described in the Plea Agreement, two former
employees of MMT assigned to the DRAM Project, in direct violation
of UMC policies and their UMC employment agreements, which formed
part of the measures that UMC had in place to prevent unauthorized
use of confidential information, brought with them to UMC
confidential and alleged trade secret materials from former
employers. Those materials included the trade secret that was the
subject of the guilty plea. In August 2016, one of those employees
input parameters from that trade secret into an early draft of
UMC’s design rules for the first-generation of the DRAM Project.
These actions were both unauthorized and contrary to UMC
policies.
UMC top management was not aware at the time of the above
actions, or those of a third UMC employee in December 2015, a
management employee who had previously worked at MMT. Upon learning
about the conduct referenced above, UMC undertook significant
efforts to remove any unauthorized information from the process
technology that it was developing under the Cooperation Agreement.
The first-generation DRAM process technology was transferred to
Jinhua in September 2018. UMC values and respects the important
role it plays in the semiconductor supply chain in the U.S. and
worldwide and never planned to, and did not transfer Micron trade
secrets or any unauthorized third-party information to Jinhua.
The allegations at issue here were also the subject of a
four-month criminal trial in Taiwan, in which Micron’s counsel
participated extensively. After reviewing all of the evidence and
testimony in that matter, the Taichung district court issued a
182-page decision in which it found that one former MMT employee
divulged portions of one trade secret (the same trade secret
described in the Plea Agreement) to some others at UMC. The
district court fined UMC approximately $3.5M USD, but denied the
prosecutor’s request for $700M USD in disgorgement because it found
that there was no evidence in the case showing that UMC used the
trade secret or that the trade secret was provided to Jinhua. (All
parties have filed appeals of the Taiwan court decision).
Under U.S. law, a company is legally responsible for the actions
of its employees even where those actions violate company policy
and are performed without the knowledge of top management. In
pleading guilty, UMC recognizes and accepts liability for the
actions of certain employees.
Stan Hung, Chairman of the Board of UMC, issued the following
statement in connection with the agreement:
“As an industry-leading Taiwanese semiconductor manufacturing
company with valued and significant relationships with U.S.
companies in the semiconductor industry, UMC has been developing
and producing semiconductor and other technologies for four
decades. Several years ago, after obtaining approval from the
Taiwanese government, UMC entered into a cooperation agreement to
develop specific, mature DRAM manufacturing processes by employing
UMC’s institutional knowledge and experience, vast research and
development resources.”
When UMC top management learned about the conduct referenced in
the Plea Agreement, UMC took steps to address the situation,
including launching an internal investigation, and taking measures
to ensure that the MMT information was not used or transferred
outside the company.
As a result of this matter, UMC has implemented protocol to
better control and monitor the security of confidential
information; regularly implements compliance training on the
protection of intellectual property rights; and conducts regular
internal audits to ensure the full compliance of its daily
operations with its policy and procedures.
UMC takes full responsibility for the actions of its employees,
and we are pleased to have reached an appropriate resolution
regarding this matter. We will continue to focus on delivering
competitive logic and specialty technologies that meet the highest
standards of excellence to companies in every major sector of the
electronics industry.”
About UMC
UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor
foundry. The company provides high quality IC production with a
focus on both logic and specialty technologies to serve every major
sector of the electronics industry. UMC’s comprehensive technology
and manufacturing solutions include logic/RF, embedded high
voltage, embedded flash, RFSOI/BCD and IATF-16949 automotive
manufacturing certification for all its manufacturing facilities.
UMC operates 12 fabs that are strategically located throughout Asia
with a maximum capacity of more than 750,000 8-inch equivalent
wafers per month. The company employs approximately 19,500 people
worldwide, with offices in Taiwan, China, United States, Europe,
Japan, Korea and Singapore. For more information, please visit:
www.umc.com
Note from UMC Concerning Forward-Looking Statements
This press release contains forward-looking statements intended
to qualify as “safe harbor” under the Private Securities Litigation
Reform Act of 1995, as amended. These forwarding looking statements
are based on the management’s current expectations, estimates,
beliefs, forecasts and projections of future events. These
forward-looking statements include, without limitation, statements
relating to the Plea Agreement; UMC’s actions to protect
intellectual property rights; the implementation and upgrade of
UMC’s compliance systems; and the ability to deliver excellent
products to customers.
Forward-looking statements involve risks and uncertainties that
may cause actual results to differ materially from those contained
in the forward-looking statements. These factors include, but are
not limited to, risks relating to the resolution of the criminal
proceeding, the uncertainty in the outcome of the criminal
proceeding and other risks as described in our SEC filings,
including our Annual Report on Form 20-F and Report for Foreign
Private Issuer on Form 6-K. Other unknown or unpredictable factors
or underlying assumptions subsequently proving to be incorrect
could cause actual results to differ materially from those in the
forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, outcomes,
performance, or achievements. You should not place undue reliance
on these forward-looking statements. All information provided in
this press release is as of today's date, unless otherwise stated,
and UMC undertakes no duty to update such information, except as
required under applicable law.
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version on businesswire.com: https://www.businesswire.com/news/home/20201028006297/en/
UMC Corporate Communications Richard Yu (886) 2-2700-6999 ext.
16951 richard_yu@umc.com
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