Dutch chip firm ASML says former China employee stole data

By Michelle Toh, CNN

ASML, the Dutch chip equipment maker, has accused a former employee in China of stealing data related to its proprietary technology, in a case that highlights its importance in the global semiconductor supply chain as tension grows between the United States and China.

The breach may have violated certain export control regulations, the company said Wednesday in its annual report, adding that it did not believe the incident was material to its business.

The firm has reported the infraction to authorities and is now adding new “remedial measures in light of this incident,” it added.

ASML did not give further details about the episode, which it said was under internal review.

Asked about the matter on Wednesday, Chinese Foreign Ministry spokesperson Wang Wenbin said he was not aware of the incident.

ASML’s disclosure comes amid heightened scrutiny over who should have access to its technology.

The company is known for its prowess in making lithography machines, which uses light to print patterns on silicon. That step is crucial in the mass production of microchips.

A hot-button issue

Because of its dominance in the market, ASML has been cited by experts as a bellwether of the growing rift between China and the West over the control of advanced technology, including semiconductors.

In recent weeks, the Netherlands and Japan have joined the United States in restricting sales of some computer chip machinery to China, according to reports from Bloomberg and Reuters, citing unidentified sources.

ASML told CNN in a statement last month that rules were “being finalized” on export controls that could affect the company.

However, the firm said it did not expect any material impact on its financial projections for 2023, citing initial comments by government officials and market conditions. ASML had already been restricted from exporting its most advanced lithography technology to China since 2019.

Before the new measures come into effect, “it has to be detailed out and implemented into legislation, which will take time,” the firm said.

A Chinese industry group has spoken out about the reported agreement, saying it will hurt consumers and businesses alike.

In a statement Wednesday, the China Semiconductor Industry Association said “if the move becomes a reality, it will cause serious harm to the semiconductor industry in China, with detriment to the global economy.”

ASML has acknowledged that the company could face more threats as it continues to gain prominence.

In its annual report, it noted that as its visibility continued to grow, “there is a risk that this may lead to actions that may adversely impact the security of ASML or the safety of its employees.”

The company is already experiencing an increasing number of cyberattacks on its IT systems, including attempts to gain access to data, it added.

ASML has pointed to potential intellectual property infringement in China before.

In the company’s 2021 annual report, it said it had informed Chinese authorities of concerns that another firm “was actively marketing products in China that could potentially infringe on” its intellectual property rights.

ASML monitored the situation and was “ready to take legal action if appropriate,” it said at the time.

— CNN’s Wayne Chang contributed to this report.

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