Chip Engineers from the U.S. Charged in Scheme to Steal

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Four engineers who formerly worked for Applied Materials Inc. have been charged by officials in the U.S. with attempting to steal multiple chip designs from the semiconductor equipment company to sell to a startup from China.

This might fuel worries that the second largest economy in the world is using illegal tactics to break the dependence it has on imported chips.

Robert Ewald, Wei-Yung Hsu, Donald Olgado and Liang Chen are all accused of the downloading of data from the internal engineering Applied Materials database, including over 16,000 drawings, and hatching a plot to lure investors into funding a China and U.S.-based startup that could compete with Applied, said prosecutors on Wednesday via a prepared statement.

The specs that were stolen detailed Applied’s different processes for chip manufacturing in high volume. The chips are used to electrify and light smartphones and flat screen televisions.

If the four are convicted, they will face as much as 10 years behind bars in federal prison for each of the 11 counts of possessing trade secrets that had been stolen. The four will be arraigned December 15.

A spokesperson for Applied Materials said the company safeguards all its intellectual property vigorously from unlawful use and theft. He added that the company supported the legal action taken in the case to ensure that anyone obtaining the company’s trade secrets in an illegal fashion will be brought to justice. The spokesman ended his statement by saying the company could not make any further comment on the legal actions.

Applied Materials plays an important role in today’s chip industry as it is the biggest supplier of machinery needed for the manufacturing of vital electronic components.

A large portion of the expertise and the value of intellectual property that makers of chips possess, comes from the mastery they have of the process technology involved in the producing of chips, something that is becoming more and more harder as limits of conventional materials such as silicon are reached.

The largest semiconductor consumer is China as an end market. Just a small portion of that demand gets met by local companies. The Beijing government has budgeted millions to build a local industry.

In addition, attempts to buy U.S. chip makers by entities that are related to China have resulted in blocked sales by federal regulators.

No companies from China are listed as the top semiconductors makers in the world. While more and more plants are being built in China, they are not owned by companies from China.

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