South Korean 3D Printing Industry Sounds Alarm Over Data Leakage

An article recently published in BusinessKorea has highlighted that small and medium-sized enterprises (SMEs) utilizing additive manufacturing (AM) in South Korea are increasingly worried about the threat of leaking intellectual property (IP), especially to China, via multiple different connections to the latter nation’s AM industry. The BusinessKorea piece specifically focused on SMEs in the print services market segment, which the publication estimates includes “at least 100” firms.

The primary issue involves instances where South Korean service bureaus are outsourcing print orders directly to Chinese companies, presenting a problem on at least two fronts. There are the simpler cases of alleged straight-up IP theft: for instance, BusinessKorea mentioned one unnamed company that submitted a large order for cell phone cases to a Chinese business. The latter “suddenly disappeared just before launch, canceling the entire project”.

Then there are the cases of apparent fraud by the South Korean SMEs themselves, whereby the companies are claiming to produce parts domestically, but are “suspected of actually outsourcing production to companies abroad”. And, finally, there are the potentially most worrisome examples of all: alleged acts of cyber-theft enabled by Korean companies’ use of Chinese AM equipment and software. In connection with that particular context, an unnamed “industry official” cited the raid on Chinese software provider VoxelDance that took place at Formnext 2024.

Since many of the companies in the 3D printing space in South Korea have connections to what the nation’s Industrial Technology Protection Act designates as “national core” industries, like semiconductor production and aerospace, there is the possibility that some of the SMEs could be in violation of South Korean law:

BusinessKorea talked to a “police official familiar with technology leakage investigations,” who told the magazine, “If a disguised company diverted a client’s design drawings and content to a Chinese company, it could potentially violate the Unfair Competition Prevention and Trade Secret Protection Act. If the affected company handles national core technology, charges of violating the Industrial Technology Protection Act could also apply.”

However, South Korea’s existing regulatory framework relevant to the AM industry makes prosecuting any such cases rather difficult:

As an official from the nation’s Ministry of Science and ICT explained to BusinessKorea, “3D printing service businesses are currently operated under a reporting system. Even if we conduct a fact-finding survey on companies, it’s realistically difficult to detect cases that violate the law.”

Just like in every other country around the world with a burgeoning 3D printing industry, the lag displayed by South Korea’s regulatory environment in terms of its ability to deal with manufacturing data leakage is perhaps above all a symptom of the increasing 3D printing adoption rate by South Korean businesses.

In the U.S., which may face this challenge more than any other nation, there have been scattered instances of 3D printing companies being forced to pay fines due to alleged trade law violations. But there should be little doubt that the American 3D printing landscape is evolving far too quickly for the existing relevant legal measures to sufficiently address the potentially socially detrimental effects of growing use of 3D printing.

In the long run, though, this state-of-affairs could prove to be far more of an advantage than a weakness for the AM industry. Nations like the U.S. and South Korea — which are key partners with one another in the realms of both national security and trade — could be prompted to unite surrounding an accelerated push on manufacturing cybersecurity, which in turn could serve as a bedrock for further partnership centered on supply chain digitization.

Regulation isn’t something to be “liked” or “disliked”, so much as it is something that is needed or not needed. In the cases where it is needed, but lacking, it can be just an even bigger impediment to growth than it is in cases where it exists, but goes overboard. I think the AM industry is currently at a point where the achievement of significantly greater adoption rates may require the right kinds and levels of new regulation.