A former employee of ASML Holding accused of stealing trade secrets from the manufacturer of the world’s most advanced semiconductor-making equipment, later worked for Huawei Technologies, according to a Dutch media report.

ASML disclosed in its 2022 annual report published in February that one of its former China-based employees had engaged in “unauthorised misappropriation of data relating to proprietary technology” that may have violated some export controls.

ASML CEO Peter Wennink characterised the incident as “one piece of a puzzle that you don’t have the box for”, and the Veldhoven, Netherlands-based company did not disclose what data was stolen. But a Bloomberg report at the time said the theft targeted a chip machine repository that included details of ASML’s advanced machinery.

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On Monday, Dutch newspaper NRC reported that the perpetrator went on to work for US-sanctioned Chinese telecommunications giant Huawei after leaving ASML, citing unnamed sources.

ASML and Huawei did not immediately respond to an inquiry from the Post.

The ASML headquarters and factory in Veldhoven, Netherlands. Photo: Bloomberg alt=The ASML headquarters and factory in Veldhoven, Netherlands. Photo: Bloomberg>

The Dutch company said in February that it had reported the breach to authorities and implemented remedial measures in response, adding that it believed the breach would not have any material impact to its business.

Since landing on the US government’s so-called Entity List in 2019, Huawei has been barred from accessing advanced chip technology that uses US components, forcing major contract chip maker Taiwan Semiconductor Manufacturing Co (TSMC) to stop accepting new orders from the mainland giant.

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TSMC is a customer of ASML, which has a near monopoly position in the production of the world’s most advanced extreme ultraviolet (EUV) lithography machines, used in producing leading-edge chips.

Since 2019, ASML has stopped exporting those machines to mainland China.

Under additional export controls imposed by the Dutch government, starting in January, ASML will also be barred from shipping some of its less advanced deep ultraviolet (DUV) immersion lithography systems to China.

Constricted access to lithography machines has become a major roadblock to China’s chip self-sufficiency goals.

Huawei in August quietly released a 5G-capable smartphone, the Mate 60 Pro, which contains an advanced 7-nanometre processor. While the achievement has been hailed domestically as proof that China can make technological breakthroughs despite US sanctions, the chip was believed to be made using DUV rather than EUV machines.

An advertisement for the Huawei Mate 60 series smartphone in Shanghai. Photo: Bloomberg alt=An advertisement for the Huawei Mate 60 series smartphone in Shanghai. Photo: Bloomberg>

EUV machines are currently necessary for producing 7-nm chips or below in a commercially-viable way.

Amid heightened geopolitical tensions, ASML and other chip-related companies have previously accused Chinese entities of intellectual property (IP) theft and talent poaching.

In 2022, ASML said a Beijing-based firm marketed products in China that “could potentially” infringe on ASML’s IP rights.

In 2021, the economic minister of Taiwan accused Beijing of stepping up efforts to gain the island’s advanced technology and poach its talent in response to the China-US tech war. Last year, the government of Taiwan began enforcing regulations to prohibit mainland Chinese firms from hiring top talent in sensitive sectors such as chips.

More recently, US authorities launched an investigation into the Chinese gallium nitride-on-silicon semiconductor company Innoscience, after a US competitor accused it of hiring two ex-employees, including an engineer, to obtain its secrets and infringe its patent rights. Innoscience denied that the hires amounted to evidence of patent infringement.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.