Silicon Valley chip-gear maker sued in China over alleged trade secret theft

By Debby Wu and Olivia Tam, Bloomberg

Top US chip-equipment supplier Applied Materials Inc. was sued by a rival in China over what that company characterized as trade secret theft, a further escalation in the technology war between the world’s two largest economies.

Beijing E-Town Semiconductor Technology Co. filed a lawsuit with the Beijing Intellectual Property Court against Applied Materials, according to a company statement to the Shanghai Stock Exchange.

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The Chinese chip-gear maker alleged that the Santa Clara, California-based company illegally obtained, used and revealed its core technologies related to the application of plasma source in treating the surface of wafers, the statement said. The court has filed the case but has not begun a trial, E-Town added.

Applied Materials earlier hired two employees from E-Town’s fully owned US subsidiary, Mattson, and they were privy to the Beijing company’s proprietary plasma technologies, the filing said. Applied Materials filed a patent application crediting the duo as inventors with the National Intellectual Property Administration in China after the two joined the Santa Clara company, the Beijing firm said, alleging that the content revealed trade secrets co-owned by E-Town and Mattson.

“The patent application violated the rules of China’s Anti-Unfair Competition Law, and it infringes on trade secrets, and has caused significant damage to the plaintiff’s intellectual property and economic interests,” E-Town said in the filing, adding that Applied Materials is also suspected of marketing and selling the technologies involved in the case to Chinese customers.

E-Town is asking the court to demand that Applied Materials stop using its trade secrets and destroy related materials. It’s also seeking about 100 million yuan ($13.9 million) in recompense for damage.

The Beijing Intellectual Property Court didn’t answer multiple calls outside of regular hours. Applied Materials didn’t immediately respond to requests for comment.

Chip-gear technology is a focal point in the prolonged technology war between the US and China. To date, the semiconductor manufacturing equipment space is still dominated by the US, the Netherlands and Japan.

A yearslong US-led campaign has prevented Chinese companies from securing Dutch supplier ASML Holding NV’s state-of-the-art extreme ultraviolet lithography systems, which are required to make the most cutting-edge chips for developing artificial intelligence algorithms. ASML’s technologies also don’t work at a chipmaking plant without support from US equipment suppliers, including Applied Materials and Lam Research Corp.

While E-Town’s move might be seen as part of China’s efforts to retaliate against the US, the two companies have their own existing dispute. In 2022, Applied Materials sued Mattson over alleged corporate espionage. Mattson denied any wrongdoing at the time.

–With assistance from Peter Blumberg and Brody Ford.

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