A significant legal development has unfolded in China's semiconductor industry, as 14 individuals have been convicted for stealing advanced chip technology from Huawei. This landmark case, which underscores persistent concerns regarding intellectual property (IP) protection within the sector, revolves around the theft of core Wi-Fi 6 technology by employees of Zunpai Communications Technology Company from their previous employer, HiSilicon.

The court's ruling identified these individuals' actions as a clear infringement of trade secrets, resulting in a collective prison sentence and fines totaling 13.5 million yuan, which is approximately 1.89 million US dollars. This judgment marks a crucial step in reinforcing IP laws within the highly competitive semiconductor field.

Zhang Kun, the founder and primary offender, who formerly served as the technical director at HiSilicon, was handed a six-year prison sentence alongside a fine of 3 million yuan. Additionally, he faces a five-year ban from participating in the chip industry, as reported by thepaper.cn.

The incident was described as one of the most severe cases of technology theft in the semiconductor space, as noted by Science and Technology Daily. Judicial evaluations from the Ministry of Industry and Information Technology indicated that Zunpai's illegally obtained technology bore over 90 percent similarity to Huawei’s protected trade secrets, establishing the grounds for their conviction.

Industry experts view this case as a pivotal moment in China's ongoing battle for IP protection, prompting substantial reflection within the semiconductor community regarding investor accountability and the necessity of rigorous technical compliance reviews. Wu Shenkuo, a deputy director at the Internet Society of China’s research center, emphasized the broader implications of this ruling.

Consequently, legal experts like Cui Jun from Beijing Deheng (Shenzhen) Law Firm advocate for investors to incorporate thorough pre-investment investigations into the technical backgrounds of their startup teams. They recommend that intellectual property compliance be woven into core due diligence processes to mitigate risks of funding infringements.

Zunpai Communications was established in March 2021 and aimed to develop Wi-Fi chips, specifically targeting Wi-Fi 6 technology. Remarkably, just two months post-establishment, the company secured nearly 100 million yuan in angel funding, raising eyebrows about the legitimacy of its early financial backing.

Moreover, a notable court ruling on July 14, 2023, indicated that Shanghai HiSilicon sought to preserve assets against Zunpai estimated at 95 million yuan, hinting at the legal aftermath of the theft case and firmly establishing the seriousness of the alleged offenses.

Decisively, the Shanghai Public Security Bureau disclosed in December 2023 that police successfully cracked the case, resulting in the arrest of 14 individuals and the seizure of seven servers containing the stolen technology. These developments have reaffirmed the commitment of law enforcement to protect trade secrets vital to the technology sector.

Investigations revealed a calculated strategy employed by former HiSilicon executives Zhang and Liu. After leaving Huawei, they formed Zunpai and recruited various research and development staff from their former employer by promising lucrative salaries and equity incentives. This unethical approach was underscored by directives instructing their new hires to illegally procure Huawei’s technological information.

In light of this verdict, Huawei's internal platform Xinsheng Community lauded the ruling as a decisive victory in the fight for intellectual property rights, highlighting the implications this case holds for the future of IP enforcement within China's booming tech landscape.