11 Arrested Over Dubious Allegations of Allegedly Leaking Samsung Trade Secrets

According to Korean news sources, 11 people, including one prominent former Samsung engineer, have been arrested for allegedly selling secrets to one of Samsung's rival firms. The report states that a 46-year-old former SMD researcher, whose name is being withheld, was paid ~$170,000 "from the competitor in exchange for secret data on the so-called "small mask scanning" technology involved in building active-matrix organic light-emitting diode (AMOLED) displays for large televisions. Until now, AMOLED displays have mostly been used for small smart devices."

The complaint indicates that the researcher took a job with the rival firm with the expectation that he'd be rewarded with an executive position (apparently $170K just isn't a good enough bribe these days). When that didn't happen, the man attempted to share the data with a Chinese display manufacturer as well. If the police reports are accurate, this could balloon into a significant scandal, given that companies which pay employees to steal secrets are definitely liable for those actions.

We aren't, however, quite willing to take the report at face value. Samsung has a history of throwing tantrums when employees leave the company; the electronics giant sued LG in 2010, claiming that an engineer (only identified as Kim; the Korean equivalent of "Smith") who had previously worked at Samsung and played a key role in developing AMOLED technology, had violated company policy. The company demanded an $8600-a-day fine in damage compensation.

We suspect the two cases involve the same person. Kim quit working at Samsung in March, 2010. A negotiated non-compete with Samsung, reached in the wake of the 2010 lawsuit, would have freed him to start work at LG in November, 2011 -- precisely when Samsung claims a second engineer was busy selling trade secrets and consorting with the enemy. Either the company has two former engineers who were both instrumental in building AMOLED and looking to defect, or it's still trying to stop Kim from working for anyone else. Claiming that Kim was trying to sell technology to the Chinese ups the ante, even if the claims aren't true.

Samsung, meanwhile, isn't exactly an innocent when it comes to corporate manipulation. The company was one of five manufacturers fined a total of $859M in 2010 for price fixing and collusion; Samsung agreed to pay an additional $240M in in February 2011, to settle US antitrust allegations. Samsung utterly dominates the AMOLED business, with an estimated 98% market share, and has opted to keep the AMOLED arm of its display business, even as it divests itself from LCD production.

It is, of course, absolutely possible that the researcher in question is a slimy piece of work who got caught -- but given the circumstances, there's good reason to question that interpretation.