First, UMC lured away engineers from Micron's Taiwan operations with promises of raises and bonuses, according to the Taiwanese authorities. Then, it asked them to bring some of Micron's secrets with them, according to Micron's court filings and the authorities. The engineers illegally took with them more than 900 files that contained key specifications and details about Micron's advanced memory chips, the authorities said.
Micron grew suspicious, according to its court documents, after discovering one of its departing engineers had turned to Google for instructions on how to wipe a company laptop. Later, at a recruiting event in the United States aimed at Micron employees, Jinhua and UMC showed PowerPoint slides that used Micron's internal code names when discussing future chips it would make, according to the court documents.
Alerted by Micron, the Taiwanese police tapped the phone of one Micron engineer, Kenny Wang, who was being recruited by UMC. According to an indictment in Taiwan against Mr. Wang and others, UMC reached out to Mr. Wang in early 2016 using Line, the smartphone messaging app, while he was still working for Micron. UMC explained it was having problems developing its memory chip technology. Mr. Wang then grabbed the information it needed from Micron's servers, and later used it to help UMC's design. The police said Mr. Wang received a promotion at UMC.
When investigators showed up at UMC's offices early last year, the police said, some employees rushed to hide what they had taken from Micron. Mr. Wang and another former Micron employee gave laptops, USB flash drives and documents to an assistant engineer, who locked them in her personal locker. She then left the office with Mr. Wang's phone — the one that the police had tapped, which was quickly tracked down.
UMC filed its own criminal complaint against Mr. Wang last year, which Taiwanese prosecutors rejected. Mr. Wang and other engineers who were charged said they had taken the trade secrets for personal research. Mr. Wang did not respond to emails and phone calls for comment.
In January, Micron was hit with a patent infringement suit by Jinhua and UMC over several types of memory. As part of the suit, the companies requested the court ban Micron from making and selling the products and pay them damages. The case is being heard by a court in Fujian Province. The Fujian provincial government is an investor in Jinhua.
In a letter sent to President Trump, Senators James Risch and Mike Crapo, Republicans of Idaho, expressed concern about the entire case and specifically the rapid pace with which the patent lawsuit has proceeded. The case could block Micron from selling some products in China.
"If the case against Micron moves forward, and the Chinese government once again rules in favor of itself, it would cause substantial damage to Micron and the U.S. tech industry as a whole," said the letter, which was viewed by The New York Times.
In May, China's market regulator opened a price-fixing investigation into Micron, along with the South Korean memory makers SK Hynix and Samsung Electronics. Memory prices have jumped over the past year, because of spiking demand and limited production by the three companies, which dominate the market. Another China regulator, which has said it is also monitoring the price jump, also gave a multimillion-dollar grant to Jinhua.
Jinhua and other Chinese chip makers face hurdles in catching up. Production of semiconductors involves a highly complex and automated production process that controls everything down to the atomic level.
Jinhua and others are spending big to get there. In Jinjiang, a city in Fujian Province once known as a shoe-manufacturing center, Jinhua's new factory is almost finished. Rising five stories and stretching several football fields long, the structure boasts 100,000 square feet of new office space.
Economic planners in Jinjiang said they were hoping to attract more talent from Taiwan. In addition to adding more flights there, the town was in the process of building out a bilingual international school, a hospital with international accreditation, and new upscale apartments. The new plant is just a short drive from the airport.
"Most of Made in China 2025 is likely to succeed. Not all technologies are rocket science," said Dan Wang, a technology analyst in Beijing with Gavekal Dragonomics, a research firm. "With enough subsidies, Chinese firms have a good shot at catching up to the technological frontier."
Follow Paul Mozur on Twitter: @paulmozur.
—Carolyn Zhang contributed research.