South Korea indicts 10 in multi-trillion won chip espionage linked to China’s CXMT

In what is being called one of the most damaging industrial espionage cases in South Korean history, prosecutors have indicted 10 individuals for orchestrating a systematic theft of national semiconductor technology to benefit China’s ChangXin Memory Technologies (CXMT).

The Seoul Central District Prosecutors’ Office confirmed the charges this week, revealing a sophisticated operation that blended corporate shell games with surprisingly low-tech spycraft. The breach is estimated to have cost Samsung Electronics alone 5 trillion won ($3.6 billion) in lost revenue for 2024, shaking the foundations of the global “memory war.”

The “Keyman” and the Recruitment

The investigation focuses on a group led by a 58-year-old former Samsung executive, identified only as “Mr. A.” Authorities allege that Mr. A, who previously oversaw memory development at Samsung, was recruited by CXMT in 2016 to serve as its head of technology development.

According to the indictment, Mr. A systematically poached South Korean engineering talent, offering high salaries and incentives to transfer proprietary knowledge. Of the 10 charged, five—including Mr. A and a former researcher identified as “Mr. B”—have been detained.

The “Handwritten Textbook” Method

While the semiconductor industry is guarded by some of the world’s most advanced cybersecurity systems, prosecutors say the suspects used an “analog loophole” to bypass them.

To steal the blueprint for Samsung’s world-first 10nm-class (18nm) DRAM process, “Mr. B” allegedly avoided digital downloads and camera blocks by manually transcribing the data. Over several days, the researcher reportedly hand-copied 600 distinct process steps—including critical temperature settings, chemical ratios, and timing sequences—onto 12 pages of a company-issued notebook. This physical “textbook” was then walked out of the facility, undetected by digital monitoring systems.

Heart Signals and Shell Companies

The group’s operational security rivaled that of intelligence agencies. The probe revealed that the ring:

• Established shell companies in South Korea and China to launder personnel transfers and consulting fees.
• Relocated offices frequently to evade tracking by the National Intelligence Service (NIS).
• Used private codes, including heart-shaped emojis (♥♥♥♥) in encrypted messages, to signal “all clear” or warn of potential surveillance/arrest.

Collateral Damage: SK Hynix and the AI War

The espionage was not limited to Samsung. Investigators confirmed that CXMT also bolstered its capabilities by illegally obtaining trade secrets from SK Hynix via a subcontractor in 2020. This data was reportedly traded for lucrative equipment contracts.

The impact has been immediate. Armed with stolen IP, CXMT achieved mass production of 10nm-class DRAM in 2023—years ahead of industry projections. This foundation enabled the Chinese firm to aggressively pivot toward High-Bandwidth Memory (HBM), the critical component for AI processors. In November 2025, CXMT unveiled a competitive lineup of DDR5 and LPDDR5X products, directly challenging South Korean dominance.

Economic Fallout

Samsung Electronics spent approximately 1.6 trillion won ($1.2 billion) over five years to pioneer the technology that was stolen. Prosecutors estimate the breach caused Samsung 5 trillion won in lost revenue this year alone, with the total economic damage to the nation running into the tens of trillions of won.

“This is not just a business loss; it is a breach of national economic security,” a prosecutor stated during the briefing. With CXMT reportedly eyeing a $42 billion IPO in Shanghai, the legal and geopolitical fallout of this case is expected to escalate in 2026.

Summary

South Korean authorities have indicted 10 people for leaking 10nm DRAM technology to China’s CXMT. The heist involved a researcher hand-copying 600 production steps to bypass digital security. The leak has caused an estimated 5 trillion won in revenue losses for Samsung and accelerated China’s entry into the AI-critical HBM market.

FAQs

Q1: Who is the “Mastermind”?

“Mr. A,” a former Samsung executive who became CXMT’s development chief in 2016.

Q2: How was security bypassed?

“Mr. B” hand-wrote 600 manufacturing steps into a 12-page physical notebook to avoid digital detection.

Q3: What is the financial impact?

Samsung lost an estimated 5 trillion won in 2024 revenue. The total national economic damage is in the tens of trillions of won.

Q4: Why does this matter for AI? 

10nm DRAM is the base for High-Bandwidth Memory (HBM), which powers the world’s most advanced AI chips.