"Going to SK hynix? Pay 5 Million Won a Day"… Why the Court Halted Samsung Talent Transfers

Court Bans Samsung NAND Personnel from Joining SK hynix for 18 Months

Partial Injunction Granted on Non-Compete... "Need to Protect National Core Technologies"

A green light is on at the traffic signal in front of SK hynix headquarters in Icheon, Gyeonggi Province. Yonhap News Agency

As the battle for supremacy in the global semiconductor market escalates beyond technological advancement to include legal disputes over securing and retaining key talent, a court has put the brakes on SK hynix hiring core NAND flash design personnel from Samsung Electronics. Even amid recent legal precedents that broadly recognize individuals' freedom to choose their jobs, the need to protect national core technologies was deemed more important in this case.

According to the legal community on the 14th, the 31st Civil Division of the Suwon District Court (Chief Judge Shin Woo-jung) partially granted Samsung Electronics’ request for an injunction to prohibit two former employees, including person A, from transferring to a competitor, on July 9.

Employment or Consulting Prohibited for 1 Year and 6 Months After Resignation... Penalty of 5 Million Won per Day for Violations

The court ruled that A and others must not be employed by or provide consulting or similar work for SK hynix and its affiliates until April 30, 2027, which is one year and six months after their resignation. The court also imposed an indirect compulsory order requiring them to pay 5 million won per day to Samsung Electronics if they violate the non-compete obligation.

The two employees subjected to the injunction were mid-level managers in the memory division of Samsung Electronics, having worked there for about 10 to 11 years, and were reportedly in charge of core NAND flash design. A and the others reportedly managed critical information such as design direction and development schedules for next-generation products, which, if transferred to a competitor, could significantly weaken Samsung Electronics' competitiveness. They left Samsung Electronics in October last year and moved to SK hynix in February this year.

'Non-compete with Competitors for Two Years after Resignation'—Scope at Issue

The central issue in this case was how far the judiciary would recognize the validity of the agreement, signed at the time of hiring, prohibiting employment at competitors for two years after resignation. Traditionally, courts have been very restrictive in accepting injunctions prohibiting job changes, strictly limiting them to exceptional cases to preserve individuals' broad freedom to choose their occupation. However, in this instance, due to heightened concerns over technological security and the particularities of the semiconductor industry, the court took the unusual step of granting much of Samsung Electronics' argument for protection.

Office workers near Gangnam Station in Seoul. Photo by Yonhap News

The court acknowledged that ▲NAND flash design is a national core technology; ▲the two employees had access to core design information; and ▲Samsung Electronics had managed them as key personnel separately. In addition, the unfavorable circumstance that they concealed their intentions by telling the company their departure was for academic advancement while actually preparing to join a competitor was also considered.

Priority Given to Technology Protection Over Freedom of Occupational Choice

The court stated, "This technology constitutes either a national core technology or a national advanced strategic technology, and thus its protection warrants greater value," and added, "If exposed to a competitor, it could reduce the time required for that competitor to reach an equivalent technological level, inevitably resulting in a corresponding loss of competitiveness for the applicant (Samsung Electronics)."

The court continued, "Given the intense competition in fields related to semiconductors, there is a need to establish a fair market economic order. Even if the non-compete clause partially restricts the freedom of occupational choice of the obligated party, that alone does not invalidate its effect."

However, the court reduced the non-compete period claimed by Samsung Electronics from two years to one year and six months, stating, "Even acknowledging the need to protect the technology, banning employment at a competitor for two years may excessively infringe upon the freedom to choose one’s occupation."

This content was produced with the assistance of AI translation services.