Top US Chipmaking Equipment Supplier Accuses Chinese-Owned Rival of Trade Secret Theft Campaign

Wim De Gent
By Wim De Gent
June 15, 2023Business News
Top US Chipmaking Equipment Supplier Accuses Chinese-Owned Rival of Trade Secret Theft Campaign
An employee holds a silicon wafer with chips etched into it at Applied Materials in Sunnyvale, Calif., on May 22, 2023. (Jim Wilson/Pool/AFP via Getty Images)

Applied Materials Inc. is suing Chinese-owned rival Mattson over an alleged 14-month orchestrated campaign to steal some of its most valuable intellectual property.

The lawsuit mainly centers around Mattson’s dedicated efforts to lure key staff members away from Applied Materials and the suspicious circumstances coinciding with their departures.

In little more than the span of a year, Mattson recruited a senior department manager and no less than 17 of Applied Materials’ most senior engineers—individuals privy to sensitive information, such as newly developed chipmaking processes and the company’s technology roadmap, Applied Materials said in the court filings.

“Many of these documents are highly sensitive, technical, and contain Applied’s trade secrets and know-how which would give Mattson years of competitive advantage in its technology trajectory and development,” the U.S. company said in a March 2022 filing.

E-Town Dragon Semiconductor Industry Investment Center, the company that bought Mattson in 2016, is backed and operated by Beijing’s city government, which, for all intents and purposes, means the Chinese Communist Party (CCP).

“The claims against Mattson have no merit and will be resolved in our favor,” a Mattson spokesperson told Bloomberg News, who broke the news of the lawsuit on Monday.

“The complaint in this case was filed 16 months ago and it did not include any evidence to support the allegations against Mattson,” the spokesperson added. “No evidence has appeared since then, despite a vigorous court process, and none will appear in the future because the allegations are false.”

It addition to suing Mattson in 2022, Applied Materials also sued Canfeng Lai, the latest employee to depart the company, who admitted in a declaration to the court to sending Applied Materials documents to a personal email account.

Applied Materials considers his admission concrete evidence of espionage, but Lai claims his intention was merely to keep “souvenirs” of his accomplishments.

“I did not intend to use or disclose any confidential Applied information in my new role at Mattson,” Lai stated. “I have never used or disclosed any Applied confidential information (whether or not reflected in the documents I sent to myself) outside of Applied.”

In its complaint, Applied Materials described how Lai, one day after accepting Mattson’s job offer in February 2022, tried to download files onto a USB drive. When this failed, he emailed volumes of information to himself.

Among the files that Lai sent to himself was detailed information about a new type of deposition chamber essential to chip manufacturing. According to Applied Materials, the new chamber is a significant step forward in the production of high-performance chips.

“We are taking legal action to ensure our intellectual property rights are protected,” Applied Materials told Bloomberg, adding that it “vigorously safeguards” its IP.

Applied Materials, along with Netherlands-based industry leader ASML, make some of the world’s most sophisticated equipment for fabricating chips.

In 2018, the Justice Department under the Trump administration launched its “China Initiative” that focused on corporate espionage, but the program was ended in February 2022 after some activists and academics launched complaints that it unfairly targeted people of Chinese ancestry.

In March, a bill was introduced to re-establish the China Initiative.

ntd newsletter icon
Sign up for NTD Daily
What you need to know, summarized in one email.
Stay informed with accurate news you can trust.
By registering for the newsletter, you agree to the Privacy Policy.