Taiwan’s Criminal Investigation Bureau (CIB), which is roughly equivalent to the American FBI, on Monday announced the arrest of six engineers who work for a Taiwanese branch of Germany’s BASF SE chemical manufacturing corporation.
Police accuse the six of leaking BASF technology to a Chinese company in an enormous, highly lucrative technology theft scheme.
The six engineers allegedly accepted an offer of almost $6 million to help China’s Jiangyin Jianghua Microelectronics Materials corporation build a new factory in China. According to the CIB, BASF could lose over $100 million per year from the technology stolen, including grave damage to BASF’s ambitious plans for expansion in China. The technology the accused allegedly stole pertains to the process of manufacturing computer chips.
The Financial Times described the allegations in detail on Monday:
In the BASF case, the CIB said the six engineers under investigation handed over details for the production of chemicals used in the electronics sector and were expected to oversee the construction of, and ramp-up manufacturing in, a new electronics materials plant using that technology in China.
According to the investigators, Jiangyin Jianghua in 2017 first hired a retired former director of a BASF plant in the Taiwanese city of Taoyuan. This person, in turn, allegedly poached BASF engineers in charge of production and process technology to join the Chinese rival.
That group then worked with a current BASF executive in charge of plant construction to transfer the German group’s “key technologies and processes” to a new electronics materials plant for Jianghua, the CIB said.
Nikkei Asian Review stated the theft specifically concerned “technologies and formula for ultrapure electronic-grade ammonia water and sulfur” used in manufacturing advanced computer chips. BASF’s clients include nearly all of the major semiconductor manufacturers in the world.
The engineers allegedly launched the technology theft scheme in 2017 when Jianghua hired one of the suspects, a retired BASF factory manager, to “poach engineers and collude with an executive from the German company to leak key technologies to the Chinese recipient.”
CIB official Lu Sung-hao said the amount of money paid to the Taiwanese conspirators and the positions they accepted with Jianghua made the case usual.
That Chinese companies poach Taiwanese executives and that they demand them to bring proprietary technology from their former employers is both common What makes this case special is that the Chinese recipient company went further and planned for the Taiwanese executives to help manage the production using the stolen technology. That is probably because they still lack the capabilities to handle this high-end technology themselves.
The CIB said only one of the six defendants was still employed by BASF at the time of the arrests, and that individual has been suspended by the German company. BASF vowed to “further reinforce” its defenses against intellectual property theft but did not immediately commit to taking legal action against Jianghua.
Investigators reportedly discovered money from the Chinese company sitting in overseas bank accounts held by the six engineers. The police waited for five of them to return to Taiwan from mainland China to celebrate the New Year holiday before making the arrests.