ASML Holding NV has said that an affiliate of a Chinese company that it previously accused of stealing its trade secrets has begun marketing products that could infringe on its intellectual property (IP) rights.
“Early in 2021, we became aware of reports that a company associated with XTAL Inc, against which ASML had obtained a damage award for trade secret misappropriation in 2019 in the USA, was actively marketing products in China that could potentially infringe on ASML’s IP rights,” the Dutch company said in its latest annual report released yesterday.
ASML has requested certain customers not to aid the associated firm Dongfang Jingyuan Electron Ltd (東方晶源微電子科技) — a corporation that has received Beijing’s stamp of approval under a program known as “little giants” — and informed the Chinese authorities of its concerns.
Photo: Reuters
The company said it is “monitoring the situation closely and is ready to take legal action if appropriate.”
An inquiry sent to the official e-mail listed on XTAL’s Web site could not be delivered and calls to Dongfang Jingyuan’s headquarters in Beijing went unanswered.
ASML occupies a pivotal role in the global chip supply chain. It has a monopoly on advanced extreme ultraviolet (EUV) lithography systems that are indispensable to producing the most cutting-edge chips in the world, and it also supplies deep ultraviolet lithography machines needed to make more mature semiconductors.
China is reliant on ASML’s technology as it tries to build a domestic chip ecosystem that would reduce its dependence on foreign imports.
However, that effort has been thwarted, with the US government reportedly pressuring Dutch officials not to allow ASML to sell its EUV systems to China in 2019.
To this day, ASML still has not obtained an export license to ship its most advanced machines to China.
Chinese companies racing to build up their technological prowess have often been accused of stealing trade secrets from foreign firms. While Beijing has categorically denied such practices, IP theft has long been a sticking point in China’s relations with other countries, particularly with the US.
In 2019, a US court awarded ASML US$845 million in damages in a trade secrets theft lawsuit against XTAL, although the Dutch company denied it was a victim of Chinese espionage.
In May last year, Dongfang Jingyuan received the title of “little giant,” a designation for start-ups that have been selected under an ambitious government program aimed at fostering a tech industry that can compete with Silicon Valley.
The latest development came as Hytera Communications Corp (海能達通信), a Chinese technology company, was accused by US prosecutors of stealing trade secrets for mobile radio technology developed by Motorola Solutions Inc.
Hytera recruited and hired Motorola employees to take proprietary information from internal databases from 2007 to 2020, according to a 21-count federal indictment unsealed on Monday in Chicago.
The names of others charged in the indictment remained sealed.
In 2020, Motorola won a US$764.6 million civil court verdict against its Chinese rival after a jury concluded that Hytera stole critical trade secrets for two-way radio technology used by school officials, utility workers and construction crews.
Hytera denied stealing technology and said it developed its products on its own.
It has appealed the verdict and accused Motorola of abusing its superior market power to hobble competition.
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