On September 13, a revised criminal law that allows for the punishment of acts involving the transfer of state secrets, including semiconductor and artificial intelligence (AI) technologies, to foreign entities took effect. The key change expands the scope of espionage laws, which were previously limited to 'hostile nations,' to include all foreign entities. However, critics argue that the law may be insufficient to prevent industrial technology leaks, as most incidents involve insiders and do not cover foreign companies or key national technologies.
According to legal and industrial sources, the revised law introduces Article 98-2, 'Espionage for Foreign Entities.' Under this provision, individuals who receive orders or instructions from foreign entities or similar organizations and engage in the detection, collection, disclosure, transmission, or mediation of state secrets can face a prison sentence of three years or more. This marks the first expansion of the espionage law's application in 73 years since the criminal code was enacted in 1953.
Previously, incidents involving the leakage of key technologies to countries like China were primarily addressed under the Industrial Technology Protection Act or the Unfair Competition Prevention Act. Last year, police reported 179 cases of technology leaks, with 33 involving overseas transfers, of which 18 (54.5%) were to China. The sectors most affected included semiconductors (5 cases), displays (4 cases), and secondary batteries (3 cases). The police have classified technology leakage as a crime that threatens national economic security and plan to strengthen investigations.
Most of the leaks were found to originate from within companies. Of the 179 cases reported last year, 148 (82.7%) involved insiders, such as employees. Small and medium-sized enterprises were the victims in 155 cases (86.6%). A case was also reported involving an unregistered employment agency that facilitated the transfer of key semiconductor personnel to Chinese firms for substantial fees.
Legal experts note that the implementation of the law does not mean that espionage charges will be immediately applied to cases of industrial technology leakage. The leaked information must qualify as state secrets under the criminal code, and the criteria of receiving orders or instructions from foreign entities must also be met. Furthermore, not all national core technologies defined under the Industrial Technology Protection Act automatically qualify as state secrets. There are concerns that interpretations of whether foreign private companies fall under the definition of 'foreign entities or similar organizations' may vary during investigations and trials.
This context has led to proposals for further amendments even before the law's implementation. Koh Dong-jin, a lawmaker from the People Power Party and former president of Samsung Electronics, introduced a bill last month that specifies foreign companies and national core technologies as targets of the foreign espionage law and seeks to increase the minimum sentence from three years to ten years. This bill was referred to the National Assembly's Legislation and Judiciary Committee on September 1.
Experts continue to express concerns that punishing after the fact is not an effective way to address technology theft. They argue that the focus of responses to technology leaks should shift from post-fact punishment to early prevention of the use and dissemination of leaked technologies. An industry insider stated, 'It is already too late to simply increase penalties after technology has been stolen. It is more important to detect high-value recruitment by foreign companies and contact with departing employees early, and to expand security measures to small and medium-sized partner companies.'
* This article has been translated by AI.
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