Updated Jan.17,2006 22:23 KST

Industrial Espionage Prevention Is a Key Investment

Attempt to Steal Vital Korean LCD Technology Foiled
The prosecution has nabbed former Samsung Electronics employees who tried to set up a plant in China by stealing seventh-generation liquid crystal display (LCD) core technologies and poaching the company¡¯s R&D staff. A former Samsung researcher identified as Park, 44, is charged with conspiring with current researchers to steal 10 thin-film transistor (TFT) LCD technologies and set up a color filter plant in Shenzhen.

Samsung Electronics is now the world leader in that field, accounting for 45.3 percent of the global TFT-LCD market. In investment in seventh-generation technology, too, Samsung leads the world. Spurred by a boom in camera phones and digital media broadcasting (DMB) phones, several countries have boosted investment in the TFT-LCDs these gadgets use. Samsung Electronics is said to have invested W262 billion (US$262 million) in the seventh generation technology. Market researchers estimate that Korea could have lost W5 trillion over the next five years if the attempt had succeeded.

The IT era has made it almost more important to safeguard technology than to develop it. Cutting-edge core technologies can mean sink or swim not just for corporations but for nations. Yet we continue to hemorrhage technology. According to the Ministry of Commerce, Industry and Energy, of the altogether 80 foiled attempts since 1998 to spirit core technology abroad, 29 happened last year.

Combined losses if they had all succeeded are estimated at W79 trillion. So much industrial espionage is of course attributable to the fact that Korean firms rank first in the world in cutting-edge IT technology. Chinese and Taiwanese companies have taken to jumping the gun in acquiring such technologies in the semiconductor, LCD, plasma display panel (PDP) and code division multiple access (CDMA) sectors by simply buying the Korean firms that invented them.

To stop that leakage of technology, we must urgently adapt the security framework to new threats. We do have laws protecting business secrets, but they focus on punishment after the fact. What we need is prevention. In adapting it, however, we have to steer clear of causing a brain drain in science and engineering jobs or limiting the freedom of start-ups with red tape.

The most important thing is for individual businesses to build up their security infrastructure. Only 47 percent of companies have confidentiality rules, and only 34 percent carry out security checks. Security consciousness has substantially improved in large businesses but is still negligible in small and medium-sized venture companies that often drive innovation.

In Japan, the Hitachi Group attempts to block information leakage through PCs by replacing all the 300,000 business-use PCs within the group with company network terminals by 2008. Staff will then be banned from storing, inputting or copying information for personal purposes. Among other measures, we need to improve the treatment of R&D personnel. For that to happen, businesses need to move away from a mindset that regards security control as an expense and sees it instead for the investment in their future that it is.

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