ASML, a leading manufacturer of computer chips, has reported data theft by an employee in China, thus violating their IP rights. Regarding this data theft, ASML has reported the issue to authorities in the US and Netherlands. The reveal from ASML amid the situation of chip shortage is concerning for the technology market. This is especially when the US and China are battling fiercely for getting the lead in the chip market. A leading position in the chip industry means control over the technology market and crucial equipment such as computers, smartphones, and other communication services. ASML is one of the leading manufacturers of silicon chips that are used in such devices. China currently holds a significant position in the silicon chip market because of its larger manpower and manufacturing industry. But the news of ASML’s data theft may have a massive negative impact on China’s chip industry, which has already suffered extensively during stringent restrictions applied by the Chinese government during the period of COVID-19.
On Thursday, February 15th, ASML published its annual report, where the company mentioned this data theft. It said that the company experienced unauthorized access to the company’s valuable data related to proprietary technology by an employee in China. The company also thinks that as a part of this incident, many export control measures were also violated and that it is working on implementing remedial measures. ASML has had a similar experience with its IP rights in China. The Chinese market is notoriously famous for violating the IP rights of global companies. Many technology companies have experienced violations of their IP rights in the country. But because of the country's legislation, these companies go unnoticed in the country. In the past, ASML came to know that a Chinese company named, DongFang JingYuan Electron, is violating ASML’s IP rights by marketing products sharing similarities with ASML’s products. DongFang JingYuan Electron is a Chinese company specializing in semiconductor equipment and software. When asked about it, DongFang JingYuan Electron denied every allegation, saying that the reports against the company have inconsistent facts.
The three years of COVID-19 were stressful for every foreign company operating in China. The primary reason behind this distress was China’s stringent Zero-COVID policy, under which the country had closed its borders with heavy controls over imports and exports. Because of this, many companies reported lowered output volume, leading to low revenue. Amid this, the US also curbed the export of chips to China. This meant that top chip manufacturers such as AMD, Intel, and Qualcomm were restricted from supplying chips to China, where many companies had their manufacturing plants set up. The US even made it mandatory for companies using US tools and software to acquire a license if they want to export chips to China. The US has also urged other countries to follow a similar suit to prevent the growth of the Chinese silicon chip market. The US urged Japan and the Netherlands to adopt their policy. As a part of this, the Netherlands had already applied restrictions on ASML to prevent it from selling its modern lithography machines to China. Lithography machines have extreme importance for any chip manufacturer, thus not being able to acquire one of the best lithography machines in the market has affected companies operating in China.