South Korea’s Expanded Espionage Law Takes Effect Amid Push to Protect Chip Technology

South Korea's revised espionage law officially becomes enforceable from September 13, 2023, expanding the scope of criminal offenses beyond those involving North Korea to encompass all foreign entities. This move comes as Seoul endeavors to safeguard critical technologies amidst mounting competition in the semiconductor and other strategic sectors.

The National Assembly ratified the amended Criminal Act on February 26, 2023, following prolonged debates that argued the pre-existing legislation was inadequate to prosecute technology and industrial espionage perpetrated by non-North Korean actors. The amendment introduces a new crime category for espionage carried out on behalf of a foreign nation or comparable organization, which incurs a minimum penalty of three years imprisonment. Existing provisions for espionage benefiting an "enemy state" persist under the revised law.

Previously, espionage charges were typically applicable solely to activities advantageous to North Korea, compelling prosecutors to employ alternative industrial technology or trade-secret statutes in many instances involving foreign governments or corporations. The National Intelligence Service applauded the amendment upon its passage, asserting that it would enhance South Korea's capacity to thwart disclosures of strategic technologies, including semiconductors, displays, batteries, and artificial intelligence.

Legal and security professionals hailed the amendment as a resolution to a persistent gap that frequently resulted in lenient sentencing for advanced industrial technology leak cases. Advocates contended that the modification would heighten deterrence against industrial espionage. The amendment was enacted on March 12, 2023, and commenced implementation following a six-month transitional period commencing September 13, 2023.

The alteration stemmed from prominent technology leak investigations, such as the indictment in 2022 of five former Samsung Electronics employees for transmitting crucial dynamic random-access memory (DRAM) chip technology to Chinese memory enterprise CXMT. Samsung and CXMT declined to comment at the time.

Responding to inquiries regarding whether the law, which lacks explicit country specification, may be perceived as targeting Beijing, China's foreign ministry spokesperson Mao Ning stated that China mandates its firms to engage in international collaboration in conformity with international rules and laws. "At the same time, to this end, we believe that all countries should safeguard the normal investment and business activities of enterprises and provide a fair, just, and non-discriminatory business environment," Mao conveyed during a routine news briefing on Friday.