Applied Materials, a major US chip-equipment maker, is facing a lawsuit in China over alleged trade secret theft.

Beijing E-Town Semiconductor Technology filed the case with the Beijing Intellectual Property Court, claiming Applied Materials illegally obtained and used proprietary plasma technology developed by E-Town and its US subsidiary, Mattson.

E-Town said two former Mattson employees who joined Applied Materials were later named as inventors on a patent application in China, which it alleges disclosed confidential information.

The lawsuit seeks to stop Applied Materials from using the disputed technologies and asks for damages of about 100 million yuan (US$13.9 million).

The court has accepted the case but has not started a trial.

The dispute comes as US and Chinese firms face growing tensions over chip technology, with the US and its allies restricting exports of advanced semiconductor tools to China.

Applied Materials previously sued Mattson in 2022 over alleged corporate espionage, a claim Mattson denied.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Employee poaching has become a systematic method for technology transfer

The Applied Materials case follows a well-documented pattern where semiconductor companies acquire trade secrets by hiring engineers from competitors who bring proprietary knowledge with them.

A similar case involved a former TSMC engineer who was indicted for stealing 28-nanometer process technology after copying sensitive information to use at a new job in China 1. In another instance, Haoyang Yu downloaded hundreds of confidential schematic design files worth millions from Analog Devices while employed there, then used these secrets to establish his own company 2.

This talent poaching strategy has intensified significantly, with Chinese companies offering salaries three to five times higher than local rates to attract Taiwanese semiconductor professionals 1.

The scale became evident when about 50 employees from Nanya Technology alone left for Chinese firms in 2022, indicating how systematic this approach has become 1.

The high stakes explain why companies pursue this strategy. The US semiconductor industry invests approximately 20% of its revenues annually in research and development, making this intellectual property extremely valuable 3.

2️⃣ Legal disputes over trade secrets reflect broader semiconductor decoupling