Kai-Shen Huang, Director of the Democratic Governance Program at the Research Institute for Democracy, Society, and Emerging Technology (DSET), recently published a chapter titled “Micron versus UMC and Fujian Jinhua: The Cross-Border Struggle over Integrated Circuits’ Trade Secrets.” This work provides an in-depth analysis of the legal dispute between the U.S. semiconductor giant Micron and Chinese companies Fujian Jinhua and United Microelectronics Corporation (UMC), shedding light on China’s foreign investment strategies and associated risks behind its semiconductor development efforts.
The chapter begins with the U.S. Department of Justice’s indictment of Fujian Jinhua and UMC in November 2018, which accused them of conspiring to steal Micron’s trade secrets. This case is explored as a reflection of China’s long-term strategy to bolster its domestic semiconductor sector through overseas investment. The lawsuit has become a landmark case in the U.S.-China tech rivalry and highlights the legal gray zones and regulatory challenges in cross-border technology collaboration.
China’s Semiconductor Strategy under “Made in China 2025”
China has consistently demonstrated its ambition to become a global leader in the semiconductor industry. Since the early 2010s, the Chinese government has introduced a series of policies to support this objective, including the Policies for Promoting the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era, issued by the State Council in 2020.
Funding for this policy framework is provided by the “China Integrated Circuit Industry Investment Fund,” commonly known as the “Big Fund.” This government-led investment initiative aims to promote China’s self-sufficiency in the semiconductor industry and advance the strategic objectives of “Made in China 2025.”
China is shifting its strategic focus from reliance on global supply chains toward semiconductor self-sufficiency. Current policies explicitly seek to establish an independent domestic semiconductor production system and to transform China into a global hub for semiconductor manufacturing. This developmental approach challenges the existing highly globalized and interconnected structure of the semiconductor supply chain.
Kai-Shen Huang explains that the Chinese government perceives the current global division of labor in the semiconductor industry as a vulnerability to national security. Policymakers prioritize national security over economic efficiency and international cooperation, viewing industrial interdependence as a source of risk, particularly in the face of pressure from the United States and its democratic allies. The ongoing U.S. export controls on semiconductor technologies to China exemplify this concern.
China’s Technology Acquisition Tactics and Intellectual Property Concerns
Global concerns over China’s semiconductor push go beyond mere industrial competition. These concerns stem from China’s aggressive and sometimes coercive approach to technological development, which often conflicts with free-market principles and international business norms. For example, in exchange for market access, China’s foreign direct investment (FDI) policies often require foreign firms to form joint ventures with local partners and transfer core technologies.
This technology strategy is also evident in China’s investments in the overseas semiconductor industry, particularly through acquisitions and other means aimed at obtaining advanced technologies for transfer back to China. Beyond formal and institutionalized methods, some Chinese companies have been accused of employing more controversial practices, such as recruiting technical talent with high salaries and acquiring trade secrets or other intellectual property through questionable means. Such actions are highly contentious and frequently result in legal disputes, prompting host countries to impose regulatory restrictions and other policy measures on Chinese investments in sensitive technology sectors.
The dispute between Micron Technology, United Microelectronics Corporation (UMC), and Fujian Jinhua Integrated Circuit Co., Ltd., spanning from 2018 to 2024, encapsulates the international community’s concerns regarding China’s semiconductor development. It remains one of the most representative cases in this context.
Taiwan’s Geopolitical Sensitivity and Global Focus
Kai-Shen Huang indicates that Taiwan’s leading position in chip manufacturing, coupled with its sensitive political relationship with China, places it at the center of current geopolitical tensions. As economic development goals increasingly intertwine with national security interests, the strategic importance of semiconductor technology continues to rise, making it a focal point of international disputes.
The “UMC-Jinhua case” also highlights a less frequently recognized issue: the practical difficulty of distinguishing between legitimate technological cooperation and the improper acquisition of trade secrets. Even collaborations formally approved through investment reviews may give rise to illegal conduct. This reflects a broader global challenge posed by Chinese overseas investments, as host countries must exercise greater caution in managing the growing number of informal cross-border business collaborations involving China and assess their compliance with domestic legal and regulatory frameworks.
This chapter appears in Case Studies on Chinese Outbound Investments: Law, Policy, and Business, edited by Professor Matthew S. Erie of the University of Oxford and published by Cambridge University Press. The volume addresses a series of fundamental questions, including: What is the nature of Chinese enterprises? What international investment strategies do they pursue? How are these strategies linked to the party-state system? What specific impacts do they have on host countries? And what are the future development trends?
Set against the backdrop of the international community’s growing vigilance toward China’s foreign direct investment, this volume presents 15 case studies that reveal the decision-making logic, policy operations, and practical strategies of Chinese enterprises, while examining their responses to challenging regulatory environments. The cases also offer insights into the impacts of Chinese investment projects overseas, particularly in developing countries most affected by China. Each case is authored by expert scholars with deep familiarity with the host countries and is based on first-hand information, making the book a valuable resource for educators and policymakers concerned with these issues.