With overseas leaks of core national technologies such as semiconductors and the theft of domestic companies' technology showing no sign of letting up, the South Korean government is sharply strengthening its technology protection framework, from investigation and punishment to compensation for victims. The plan is to grant special judicial police powers to the Ministry of Trade and Industry to block leaks at an early stage, and to raise the cost of technology theft by expanding the forfeiture and collection of criminal proceeds and by strengthening damages awards that reflect the cost of developing the technology.
The ministry announced the measures on the 19th at the 76th meeting of the Industrial Technology Protection Committee, chaired by Minister Kim Jung-kwan. It will close blind spots in technology leakage by broadening the scope of review to include the sale or withdrawal of overseas units held by companies with national core technologies, as well as indirect mergers and acquisitions by foreign parties.
Behind the tough package are increasingly brazen crimes involving advanced technology. In the case of an 18-nanometer DRAM manufacturing process that Samsung Electronics developed over five years at a cost of 1.6 trillion won ($1.1 billion), a researcher copied more than 600 process steps onto 12 notebooks and handed the information to China. Prosecutors determined the technology was used in Chinese chipmaker CXMT's 2023 mass production of DRAM in the 10-nanometer range.
At SK hynix, an employee preparing to move to a Chinese company was given a confirmed sentence of one year and six months in prison in August on charges of photographing 5,900 pages of image sensor process documents and printing and removing 186 of them. Last year, a former employee of a supplier was caught just before departing the country while attempting to smuggle process documents related to high-bandwidth memory to China.
According to the Federation of Korean Industries (FKI), damages to industry from overseas leaks of industrial technology between 2020 and June last year were estimated at 23.27 trillion won ($16 billion). Actual damages are likely to far exceed that figure when accounting for the development costs companies invested over long periods, along with the revenue and technological edge lost as competitors enter the market.
Semiconductors, the mainstay of Korean exports, have been a particular target. Data the ministry submitted to the office of Koo Ja-keun, a lawmaker of the People Power Party, showed that semiconductors accounted for 40 cases, or 37.4%, of the 107 overseas industrial technology leaks detected by the National Intelligence Service between 2021 and 2025. Including 21 display cases, the two sectors made up 57.0% of the total. Of the 33 overseas technology leak cases in which police made arrests last year, 18 involved China, more than half.
The problem is that China is catching up ever faster. According to the Korea Evaluation Institute of Industrial Technology's 2025 survey of industrial technology levels, overall technology levels in Korea and China stood at 90.2% and 89.1%, respectively, with the United States set at 100%. The gap between the two narrowed to 1.1 percentage points from 5.0 percentage points in 2023. In next-generation semiconductors, a field spanning artificial intelligence, sensors and automotive chips, China was assessed at 82.1%, ahead of Korea's 79.2%.
With the technology gap closing, the competitive edge of domestic companies could erode even faster if core processes and mass production know-how also pass to rival countries. In semiconductors, optimizing conditions for each process step and raising yields require enormous time and money. If a latecomer secures proven technology, it can cut down on trial and error and bring forward mass production. That can lead to intensifying price competition and falling market share, squeezing domestic companies' profitability and even their capacity to invest in next-generation technology.
Moreover, once technology has gone abroad and been applied to a competitor's production lines, punishment after the fact cannot easily restore a lost technological edge. The push to grant the ministry special judicial police powers also stems from the need for a rapid response. The aim is to draw on the expertise of the ministry, which designates and manages industrial technologies, from the earliest stage of an investigation in fields such as semiconductors that demand a high level of technical knowledge, so that signs of leakage can be identified and evidence secured. Broadening the review to cover sales of overseas units and indirect M&A deals is likewise intended to block core technologies before they move abroad.
"Technology leakage is a grave problem that can destroy in an instant the industrial competitiveness that the country and its companies have built up over long periods and at enormous cost, and it even threatens national security," Kim said. "We will protect the nation's industrial technology without fail."
It Is Not Only Overseas: 146 Domestic Leak Cases, With Damage Concentrated Among Small Firms
The government is also moving against technology theft within the country, not just leaks abroad. According to the Korean National Police Agency, domestic leaks accounted for 146, or 81.6%, of the 179 technology leak cases in which arrests were made last year. Cases in which small and medium-sized enterprises suffered damage numbered 155, or 86.6% of the total. Cases involving insiders such as employees and executives came to 148, or 82.7%. In effect, national industrial competitiveness is being shaken abroad while the very survival of smaller companies is under threat at home.
Smaller companies whose revenue is concentrated in a particular technology or product face a high risk of losing customers and markets if their core technology is taken. Even so, it is hard for them to win adequate compensation because they struggle to prove how much revenue they lost to the theft. Under the current Industrial Technology Protection Act, willful infringement can draw damages of up to five times the recognized loss, but the remedy loses force if the loss itself is assessed at a low level.
The government's move to reflect at least the cost invested in developing the technology in damages awards is intended to address that gap. Even where direct losses such as falling revenue are difficult to prove, damages would be calculated on the basis of development costs, raising the financial burden of technology theft. The government will also expand the scope of forfeiture and collection of criminal proceeds, and will open public discussion on raising Supreme Court sentencing guidelines and creating new sentencing guidelines for fines. It will strengthen surveys and support for technology protection at smaller companies and universities, which are vulnerable on security.
The question is whether the strengthened framework actually translates into relief for victims. In an analysis of civil rulings on technology infringement involving small and medium-sized enterprises released last year by the Ministry of SMEs and Startups, the average damages claim was 800 million won ($550,000), while courts recognized only 140 million won ($96,000). Even if development costs are reflected in the basis for damages, some point out that effectiveness cannot be assured without the specialist personnel and institutional support needed to help victimized companies secure evidence and calculate losses.
"We need to instill the understanding that the cost borne when caught is far greater than the gain from stealing technology," said Kim Dae-jong, a professor of business administration at Sejong University. "Along with tougher punishment, protection of talent, corporate security and swift investigations must all come together if Korea is to defend its competitiveness in advanced industries."
The government plans to reflect the measures in amendments to the Industrial Technology Protection Act and the Act on Special Measures for Strengthening the Competitiveness of National High-Tech Strategic Industries, and to push for their introduction this month. It also plans to release the sixth comprehensive plan for industrial technology protection within this year, a year ahead of the original schedule.
