The world’s leading supplier to the semiconductor industry ASML stated in an annual report on Feb. 9 that a Beijing-based company is selling products purportedly from technology illegally extracted from it.

The alleged firm is Dongfang Jinyuan Microelectronics Technology (DJEL), headquartered in Beijing. Beijing in May 2021 endorsed it as part of the “little giants” program, which looks to award start-ups with approval for contributing to the tech industry that can compete with Silicon Valley.

On DJEL selling products that potentially violate its intellectual property rights, ASML said it has informed the Chinese authorities and is prepared to take “legal action if appropriate.” It also urged some consumers not to help DJEL.

According to Bloomberg, the Dutch corporation ASML said, “Early in 2021, we became aware of reports that a company associated with XTAL Inc., against which ASML had obtained a damage award for trade secret misappropriation in 2019 in the USA, was actively marketing products in China that could potentially infringe on ASML’s IP rights.”

In 2019, a US court awarded ASML 845 million dollars in damages from XTAL for stealing its trade secrets. ASML said in a statement that the breaches include “inducing former employees to breach their contracts with ASML, aiding and abetting former employees to breach their fiduciary duty of loyalty to ASML, and multiple violations of California’s Computer Data Access and Fraud Act.”

XTAL had declared bankruptcy.

ASML is the world’s only producer of advanced extreme ultraviolet, or EUV, lithography systems. It is also the supplier of deep ultraviolet lithography machines used to make more advanced chips. This has made it a crucial element of the global semiconductor supply. 

For China, ASML’s technology is a key component to its ambition of developing its semiconductor ecosystem and becoming self-sufficient. Bloomberg reported that the U.S. had pushed Dutch authorities to stop ASML from exporting its products to China since 2019.

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