South Korea’s tech-leak crimes surge again as “legal revisions fail to bite,” calls to raise real penalties to U.S. levels

Surge in technology leaks hits semiconductors, displays, and secondary batteries
Laws tightened, but light prison sentences blunt deterrent effect
Korea should look to tougher responses in the U.S. and Taiwan

Cases of Korea’s core technologies being leaked overseas, including to China, surged last year, spanning semiconductors, displays, and secondary batteries. Despite the government steadily raising penalties through legal revisions, the measures have failed to deliver a meaningful deterrent effect. In the market, voices are growing that Korea should go beyond raising statutory maximum sentences and strengthen actual punishment levels, taking cues from the U.S., Taiwan, and other countries.

Technology leak cases still “surging” last year

According to the National Investigation Bureau of the National Police Agency on the 20th, a total of 179 technology leak cases occurred domestically last year, up 45.5% from the previous year. Of these, 33 cases involved leaks overseas. By country, China accounted for 18 cases (54.5%), more than half of the total, followed by Vietnam with four (12.1%), and Indonesia and the United States with three each (9.1%). By sector, semiconductors ranked first with five cases (15.2%), followed by displays with four (12.1%), secondary batteries with three (9.1%), and shipbuilding with two (6%). These are largely advanced technology areas where Korea holds a competitive edge in global markets.

The severity of technology leaks becomes even clearer when looking at specific cases. Earlier, the Seoul Metropolitan Police Agency said it urgently arrested a man surnamed Kim at Incheon International Airport in May last year as he was about to leave the country for allegedly trying to smuggle to China semiconductor packaging technology related to HBM. Kim was identified as a former employee of a partner firm supplying precision materials to a major Korean semiconductor company. Police also apprehended three additional accomplices and handed the group over to prosecutors under detention. In other cases, police last year arrested three people who sent methanol fuel cell manufacturing blueprints to an overseas investor, and a former researcher who stored materials on secondary-battery manufacturing technology—classified as a national core technology—on a personal laptop and leaked them while moving to an overseas rival.

As these cases suggest, the perpetrators were mostly insiders. Leaks caused by insiders, such as employees of victim companies, totaled 148 cases across both domestic and overseas incidents, accounting for 82.7% of all technology leak cases last year. By company size, large firms accounted for 24 cases (13.4%), while small and medium-sized enterprises made up an overwhelming 155 cases (86.8%). This is seen as reflecting criminals’ focus on SMEs, which often have relatively weaker working conditions and security environments.

Government and National Assembly efforts to strengthen institutions

The government and the National Assembly have steadily discussed revisions to related laws to minimize technology leak cases. A representative example is the partial amendment to the Enforcement Decree and Enforcement Rules of the Act on the Prevention of Divulgence and Protection of Industrial Technology (hereinafter the Industrial Technology Protection Act), which took effect in July last year. The amendment raises the maximum fine for leaking national core technologies overseas from about $11 million to roughly $49 million. Previously, punishment was limited to cases where there was an intent to transfer technology abroad, but after the amendment, penalties can be imposed if the offender merely knew that the leaked technology would be used overseas. The revision also defines brokers who introduce, mediate, or entice overseas leaks of core technologies as committing technology infringement, and increases the cap on punitive damages for industrial technology infringement from three times to five times actual damages.

Systems such as the confirmation of possession of core technologies and the registration of holding institutions were also revised or newly introduced. Previously, a technology could be designated as a national core technology only upon a company’s application. Under the new rules, if the risk of leakage is high and protection is deemed necessary, the government may notify a company to apply for designation on its own authority even without a request from the firm. Companies confirmed to hold national core technologies are subject to systematic management after registering as holding institutions. If a company holding national core technologies is illegally acquired or merged without government approval, the Minister of Trade, Industry and Energy may immediately order suspension, prohibition, or restoration without going through an investigation by intelligence authorities or deliberation by the Industrial Technology Protection Committee. Failure to comply may result in an enforcement fine of up to about $7,500 per day.

In December last year, Rep. Song Jaebong of the Democratic Party of Korea introduced a bill to amend the Special Act on Measures for the Protection of National High-Tech Strategic Industries, aiming to raise the level of protection to that of the Industrial Technology Protection Act. The amendment significantly expands the scope of what constitutes leakage or infringement of national high-tech strategic technologies. Prohibited acts explicitly include unauthorized removal of such technologies from designated locations or their use or disclosure beyond approved purposes by those with access, brokering or inducing leaks, and failure to comply with corrective orders issued by the Minister of Trade, Industry and Energy.

Punishment levels are also set to rise sharply. The maximum fine for leaking or infringing strategic technologies while knowing they will be used overseas would increase more than fourfold, from about $15 million to roughly $64 million. The amendment further allows criminal punishment from the preparatory or conspiracy stage, making the very act of preparing for a leak punishable, and mandates confiscation or forfeiture of criminal proceeds to fully recover illicit gains. In addition, it introduces a joint liability provision under which not only the offender but also the relevant corporation or individual may be fined if a representative or employee commits a strategic technology leak in the course of business, strengthening corporate oversight and supervisory responsibilities.

The National Assembly is also poised to pass an amendment to the Espionage Act that would impose a minimum prison sentence of three years for leaking industrial secrets to foreign countries. Until now, the term “enemy state” under the Espionage Act had effectively been limited to North Korea, making it difficult to apply espionage charges when secrets were leaked to other countries. Once the amendment takes effect, espionage charges will be applicable to technology leaks in areas directly tied to national security, such as semiconductors and displays.

Actual punishment levels remain low

Still, criticism persists in the market that the government’s institutional reforms remain overly cautious. The core complaint is that actual punishment levels are far lower than in advanced economies such as the United States, inevitably weakening deterrence. In the U.S., technology leakage can be elevated to a crime of up to Offense Level 36 depending on the scale of damages, carrying prison sentences ranging from 188 months (15 years and 8 months) to as much as 405 months (33 years and 9 months). The U.S. offense level system ranges from Level 1 to Level 43, with Level 36 considered extremely severe and typically applied to major economic crimes or serious violent offenses.

Taiwan, which like Korea treats semiconductors as a core national industry, revised its National Security Act in 2022 to classify technology leaks in the economic and industrial sectors as espionage. The revision allows for prison terms of up to 12 years and fines of up to about $3 million. In practice, Taiwanese judicial authorities last year indicted a case involving the leakage of key semiconductor technologies as a national security crime. Prosecutors sought prison sentences ranging from seven to a maximum of 14 years, and the court approved detention for all suspects, citing risks of flight and evidence destruction.

By comparison, Korea’s punishment levels for technology leaks are considered notably low. According to the Supreme Court, of the 33 first-instance rulings issued in 2021 for violations of the Industrial Technology Protection Act, more than 87% resulted in acquittals or suspended sentences. In 2022, the average prison term for overseas leakage of trade secrets was just 14.9 months. Although the Supreme Court’s Sentencing Commission significantly raised sentencing guidelines for industrial technology leak crimes in March 2024 and statutory maximum penalties have since been increased through legal revisions, actual punishment remains lenient. Under Korea’s current sentencing standards, the basic prison term for overseas technology leaks is only one year to three years and six months, rising to a maximum of six years even in aggravated cases.