A former Samsung Electronics employee who later joined Chinese memory chipmaker ChangXin Memory Technologies, or CXMT, was reportedly sentenced by the Seoul High Court on Oct. 22 to five years in prison for leaking Samsung's technology.

The sentence was reduced from seven years at his first trial in April. The former employee had joined CXMT in 2016.

The case highlights an intensifying battle over semiconductor know-how as Chinese chipmakers narrow the gap with established rivals, putting the race for top engineering talent increasingly at odds with efforts to protect trade secrets.

In 2023, a South Korean court granted Samsung's request to block a former DRAM researcher from joining U.S. rival Micron. It ruled that the two-year non-compete was not excessive and was necessary to protect Samsung's technology and business information, JoongAng Ilbo reported.

Closing the gap

A decade ago, Chinese memory chipmakers were not Samsung's biggest concern when it came to losing experienced engineers.

Instead, the South Korean company was more focused on employees leaving for established rivals such as SK Hynix and Micron, according to a former employee who asked not to be identified because the information was private.

Samsung has been monitoring where certain departing employees went — to signal to remaining staff that moving to competitors would be difficult — according to a former employee.

The company also used non-compete agreements restricting employees from joining rivals for two years, as part of their employment contracts, with senior employees holding valuable technical expertise likely facing closer scrutiny.

But Samsung's concern extended beyond individual departures.

"It wasn't just about one employee leaving. The company wanted to send a message to those who stayed that moving to a competitor wouldn't be easy," the former employee said.

Meanwhile, Chinese semiconductor companies have sought to close the technology gap by recruiting experienced overseas engineers with high salaries, stock options, housing and family support, according to Jeongku Choi, a senior analyst at Counterpoint Research.

Their expertise has helped Chinese chipmakers overcome technical bottlenecks, particularly as U.S. export restrictions have limited China's access to advanced chipmaking equipment, Choi said.

Once viewed as unlikely to catch up with established players, Chinese manufacturers are now seen as "meaningful competitors," she added.

Counterpoint's Memory Tracker for the second quarter of 2026 projected CXMT's share of global DRAM revenue would reach 10%.

Established chipmakers are strengthening legal protections and internal security measures while adjusting compensation packages to retain key engineers, according to Choi.

South Korea has also designated certain semiconductor manufacturing technologies as "National Core Technologies," raising the penalties for unauthorized leaks of those technologies, Choi said.

The legal battle could intensify as Chinese memory companies expand beyond their home market.

"I believe that this management of trade secrets will expand its scope even further to IP and legal areas once Chinese memory companies move beyond the Chinese market and begin to expand their exports," Choi said.

Protecting trade secrets

The growing competition is putting greater focus on how semiconductor companies protect the knowledge accumulated by engineers working on complex manufacturing processes.

In Taiwan, home to the world's largest contract chipmaker TSMC, protections for trade secrets have evolved alongside the semiconductor industry’s growing strategic importance.

Jamie J. Yang, a partner specializing in antitrust and intellectual property at Innovatus Law, said Taiwan limits post-employment non-compete agreements to two years and requires employers to compensate former employees at least half their average monthly salary during the restricted period.

Yang added that the complexity of semiconductor manufacturing makes it difficult for any single engineer to possess enough knowledge to replicate an entire production line elsewhere.

"There is just very little chance that one person ... will know enough to replicate that line in any of the other companies," Yang said.

Moves by engineers between rival semiconductor companies could increase modestly as competition for top talent intensifies, while trade secret litigation is also likely to rise as firms seek to protect their technological edge, she added.

But the challenges extend beyond Taiwan.

In Singapore, Zechariah Chan, a partner at law firm Lee & Lee, said protecting trade secrets can be particularly difficult in the semiconductor industry, where proprietary knowledge often involves intangible manufacturing techniques and methods.

You cannot 'take' the information back after the engineer has become aware of it.Zechariah ChanPartner, Lee & Lee Law Firm

Proving that a competitor has used proprietary manufacturing techniques can also be difficult, as outsiders generally see only the final product, according to Chan.

"There is no bright line between an engineer's expertise and proprietary information," he said. General skills and knowledge stay with the engineer, while trade secrets remain with the company.

In Singapore, non-compete clauses are enforceable only if they protect legitimate business interests and are reasonable in scope, geographical area and duration.

In Hong Kong, courts generally take a restrictive approach to non-compete clauses, enforcing them only when they protect legitimate business interests and go no further than necessary, according to Jezamine Fewins, head of litigation at Lewis Silkin in Hong Kong.

Courts are more willing to protect trade secrets through court injunctions, Fewins said.

"The difficulty is that often the trade secret is carried in the employee's head," she added. Information is more likely to qualify as a trade secret if its disclosure to a competitor could cause significant harm to the former employer and the company has taken steps to restrict access.

For chipmakers, Fewins said the key is to clearly define what constitutes a trade secret, make employees aware of that information and put safeguards in place to limit access.

Samsung and CXMT did not respond to CNBC's request for comment.