6 Taiwanese arrested for selling BASF secrets to Chinese

6 Taiwanese arrested for leaking BASF secrets to Chinese rival

Evidence seized by police.

Evidence seized by police. (CNA photo)

TAIPEI (Taiwan News) -- Six Taiwanese current and former employees of German chemical maker BASF SE have been arrested for selling secrets to the company's Chinese rival, announced the Criminal Investigation Bureau (CIB) Monday (Jan. 7).

The CIB's Seventh Investigation Unit has arrested six current and former employees of BASF for allegedly selling high-purity ammonia for semiconductor applications for 12-inch wafers to its Chinese rival, Jiangyin Jianghua Weidianzi Material Limited Company, announced unit captain Lu Sung-hao (呂松浩) at a news conference in Taipei on Monday. The estimated loss in annual revenues resulting from the leak in trade secrets could be as high as 100 million Euros (NT$3.5 billion).

Because China is currently blocked by the European Union from obtaining the latest in semiconductor production technology, Jiangyin Jianghua Weidianzi Material Limited Company, the largest semiconductor wafer cleaning company in China, was only able to produce 14-inch wafers. The company sought to illegally upgrade its technology by hiring a 56-year-old former BASF employee, surnamed Lin (林), who previously oversaw a plant belonging to BASF's Taiwan subsidiary in Taoyuan's Guanyin District (觀音), and payed him more than NT$410,000 (US$13,000) per month since 2017.

Lu speaking to media. (CNA image)

Lin lured five engineers from the engineering and production departments at BASF to join him at the Chinese company, including a 45-year-old engineer surnamed Huang (黃), who had previously worked as the German firm's "Director of Electronic Materials and Engineering Department." During the period when the theft of intellectual property took place, Lin and the other Taiwanese engineers set up a virtual company to sign an NT$200 million contract with Jiangyin Jianghua to assist in the construction of a new factory.

Once the new 12-inch wafers were successfully produced, the six suspects received NT$42 million from the Chinese company. The estimated annual loss in business that will be incurred by BASF as a result of this illegal transfer of intellectual property could be as high as NT$3.5 billion.

On Jan. 3, after several months of investigation, the CIB raided locations in Taoyuan, Hsinchu, and Changhua, where they arrested the six suspects, including Lin, Huang, and the four other suspects, who were surnamed Yu (余), Yeh (葉), Hsu (許), and Chen (陳). CIB agents also confiscated detailed plans on the chemical production process, technology transfer contracts, offshore banking unit (OBU) accounts, electronic records, and other related documents.

Exterior of BASF plant in Changhua. (Image from basf.com/tw)

After being questioned by police, the six men were transferred to the Prosecutor's Office on charges of violating the Trade Secrets Act (營業秘密法). Five of the men are being detained and held incommunicado, while one was released on NT$100,000 bail.