South Korea Enacts New Espionage Law to Safeguard Semiconductor Secrets

South Korea has enacted a major revision of its espionage law, marking the first significant update in 73 years. The new law, which took effect on September 13, broadens the definition of espionage to include any foreign country or organized entity, with penalties ranging from three to 30 years in prison for those found guilty of stealing semiconductor secrets.

Previously, the law primarily focused on threats from North Korea, but the revised legislation acknowledges the multifaceted risks faced by South Korean chipmakers. In 2025, South Korean authorities reported a record 33 cases of technology leaks, with over half attributed to Chinese entities, highlighting the urgency of protecting the semiconductor sector.

One notable case involved five former employees of Samsung Electronics who were indicted for allegedly transferring critical DRAM manufacturing technology to ChangXin Memory Technologies, a Chinese firm. Samsung and SK Hynix are key players in the global memory chip market, controlling substantial shares of both DRAM and NAND flash production.

The revised Criminal Act, passed on February 26, 2026, eliminates the previous requirement that espionage charges involve an "enemy state." This change allows prosecutors to pursue cases against individuals who obtain or disclose state secrets on behalf of any foreign entity, significantly expanding the legal framework available to combat technology theft.

Shifting Focus to National Security Concerns

This legislative shift signifies a broader recognition that technology theft is not merely a corporate issue but a matter of national security. The South Korean government is now deploying more resources and investigative powers to address these threats, reflecting a strategic pivot in its approach to safeguarding its technological assets.

In conjunction with this law, South Korea has outlined an ambitious $880 billion plan to establish itself as a global semiconductor hub, aiming to secure its position in the industry for the foreseeable future. The National Intelligence Service has raised alarms about the potential erosion of competitive advantages for domestic firms, especially as global demand for advanced memory chips continues to rise.

Clearance Granted

China's aggressive efforts to enhance its domestic chip capabilities add further urgency to South Korea's actions. Companies like CXMT and Yangtze Memory Technologies are rapidly expanding their production capacities, and while U.S. export controls have limited their access to advanced manufacturing equipment, acquiring human capital and process knowledge remains a viable path to closing the technology gap.

The diplomatic implications of this new law are also significant. Given that a majority of the reported leak cases involved Chinese entities, Beijing may perceive this legislation as a targeted measure, potentially straining an already complex bilateral relationship in the technology sector.