North Korean Hackers Target Chip Makers, Steal Product Designs

Key Takeaways

• South Korea’s National Intelligence Service has reported that 2 chip makers in the country have been hacked.
• The agency said that North Korean hackers were behind the attacks, which stole product designs and photos of manufacturing facilities.
• Considering the role of semiconductors in high-tech weapons, chip manufacturing has become a pressing national security concern.

Over the years, the North Korean regime has used all manner of clandestine methods to bypass international sanctions. 

In the latest instantiation of the State’s illicit procurement strategy, South Korea’s National Intelligence Service (NIS) has reported a series of cyber attacks targeting chip manufacturers. With North Korean hackers stealing semiconductor designs, the NIS has concluded that Pyongyang is preparing to set up its own chip production facilities.

South Korean Intelligence Agency Flags Cyber Attacks

In a statement reported  by the BBC, the NIS said North Korea breached the servers of 2 semiconductor manufacturers in December and February, stealing product designs and photographs of their facilities.

While the spy agency didn’t identify which companies were affected, South Korea is home to some of the world’s most important chip foundries, most notably those belonging to Samsung.

“We believe that North Korea might possibly be preparing to produce its own semiconductors in the face of difficulties in procuring them due to sanctions,” the NIS statement observed.

The latest attacks demonstrate how semiconductor manufacturing intersects with national security and geopolitical rivalry. But the issue doesn’t just affect the Korean peninsula.

How Chip Manufacturing Became a National Security Issue

Chip manufacturing hasn’t always been considered an urgent national security priority. However, following significant disruption to global semiconductor supply chains caused by the COVID-19 pandemic, governments around the world have moved to secure their domestic manufacturing capacity.

In the US, President Biden passed the CHIPS Act in 2022, providing $280 billion in funding to boost homegrown semiconductor research and manufacturing.

Similar initiatives elsewhere have also focused on investment. Meanwhile, governments have increasingly intervened to keep factories open and prevent manufacturers from being taken over by foreign companies.

In the case of the CHIPS Act, the issue was mostly framed in terms of supply chain resilience. But as the latest North Korean hacks demonstrate, ensuring technology doesn’t fall into the wrong hands is also important.

Military Applications of High-Tech Semiconductors

According to the NIS, the recent cyber attacks could be motivated by North Korea’s missile and satellite development programs, which require a consistent supply of high-end semiconductors.

The role of cutting-edge microchips in advanced weapons systems has also emerged as an important factor in US export policy. 

In recent years, the Commerce Department’s Bureau of Industry and Security has announced a string of export controls restricting  China’s ability to procure “powerful advanced chips and chip manufacturing equipment” that the agency deemed “critical for military advantage.”

Increasingly, the world’s foremost chip maker – the Taiwan Semiconductor Manufacturing Company (TSMC) – has found itself at the center of the ongoing technology race between the 2 superpowers.

Attracted by CHIPS Act subsidies and tax incentives, TSCM is building its latest manufacturing plant in north Phoenix, Arizona. 

The new factory is expected to manufacture TSCM’s most advanced semiconductors, including highly sought-after AI hardware components.