Chinese employees stole corporate secrets from ASML: Dutch newspaper FD

Technology

AMSTERDAM (Reuters) – Chinese employees stole corporate secrets from Dutch semiconductor equipment maker ASML, resulting in hundreds of millions of dollars in losses, Dutch financial newspaper Financieele Dagblad (FD) reported on Thursday. The paper said, citing its own investigation, technology had been stolen by high-level Chinese employees in the research and development department of ASML’s U.S. subsidiary and ultimately leaked to a company linked to the Chinese government.

ASML Holding logo is seen at company’s headquarters in Eindhoven, Netherlands, Januari 23, 2019. REUTERS/Eva Plevier

But ASML itself “found no hard proof of involvement of the Chinese government,” the FD reported.

An ASML spokeswoman told Reuters the company was aware of the FD report and was preparing a response.

ASML is the dominant maker of lithography systems, used to trace out the circuitry of semiconductor chips.

The newspaper based its report partly on company sources and partly on a November 2018 ruling by a California court in a suit between ASML’s U.S. subsidiary and a subsidiary of a Chinese company, XTAL Inc.

The documents from the Santa Clara, California Superior Court show six former ASML employees, all with Chinese names, breached their employment contract by sharing information on ASML software processes with XTAL, the FD showed.

“The FD’s investigation found XTAL’s Chinese parent company Dongfang Jingyuan has ties with the Chinese Ministry of Science and Technology,” the paper said.

The court awarded ASML $223 million in damages and XTAL filed for bankruptcy a month later.

The Dutch intelligence agency has included warnings in its annual threat assesments for the past several years, saying that China is targeting tech companies in the Netherlands, as it does in other countries, for intellectual property theft.

In 2015, ASML disclosed a breach of its computer systems, but said at the time damage from the hack was limited and released few further details.

ASML’s sales to China doubled to 1.8 billion euros ($2 billion) in 2018 from 919 million euros in 2017 as Beijing makes growth of its semiconductor industry a priority.

ASML CEO Peter Wennink told Reuters in January he saw no let up in demand from China, despite an economic slowdown.

Reporting by Anthony Deutsch and Toby Sterling; Editing by Stephen Coates, Himani Sarkar and Georgina Prodhan

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