ASML falls victim to corporate theft, plays down impact

April 11, 2019 16:40
A Dutch newspaper said the technology had been stolen by high-level Chinese employees at ASML’s research and development department and ultimately leaked to a company linked to the Chinese government. Photo: Reuters

Dutch semiconductor equipment maker ASML Holding NV said on Thursday that a US software subsidiary was the victim of corporate theft several years ago, but denied that the information stolen was a blueprint for its lithography machines, Reuters reports.

The comments came in response to a report in the Dutch business daily newspaper Financieele Dagblad, which said technology had been stolen by high-level Chinese employees at ASML’s research and development department and ultimately leaked to a company linked to the Chinese government.

ASML said “we discovered this theft ourselves” and took immediate action. It said the technology stolen was not core to its business, and added it was still able to operate in China.

“This affected a small part of our company in Silicon Valley where software programs for machine optimalization are developed,” ASML said in a response.

“It’s not as if a blueprint that you could use to build a lithography system is lying on the street.”

The company did not immediately answer questions as to whether Chinese employees and the Chinese government were involved, as the FD report alleged. It said information about the incident is available in public US court documents.

The FD report, which cited court documents and its own investigation, said the theft had resulted in hundreds of millions of dollars in losses. ASML had “found no hard proof of involvement of the Chinese government”, the FD reported.

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 US subsidiary and a subsidiary of a Chinese company, XTAL Inc.

Court documents

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 said.

“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 US$223 million in damages and XTAL filed for bankruptcy a month later.

The Dutch intelligence agency has included warnings in its annual threat assessments 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.

The Dutch intelligence agency AIVD did not immediately respond to a request for comment on Thursday.

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 (US$2 billion) in 2018 from 919 million euros in 2017 as Beijing makes growth of its semiconductor industry a priority.

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

“Can we still do business in a prudent way in China? Of course”, the company’s statement on Thursday said.

“This was a rotten apple ... Our clients from the United States, South Korea and Taiwan have fabrication plants in China.”

Major ASML customers include Samsung, TSMC and Intel.

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