Impact of ASML Data Breach on the Chip Manufacturing Industry

An individual who formerly worked for ASML Holding NV in China has stolen data from a software system that stores technical information about the corporation’s machinery. This information includes details about lithography systems that are critical for the production of advanced chips.

The stolen data came from a product life cycle management program called Teamcenter, which is used by employees for collaborating and managing product development. The breach marks the second time within a year that ASML has linked a breach to China.

The US is pressuring other countries, such as the Netherlands, to prevent China from advancing in chip-making capabilities. This comes amid high tensions after a suspected Chinese spy balloon was shot down over US airspace. Secretary of State Antony Blinken has called off a trip to Beijing but may meet with China’s top diplomat in Germany.

On Wednesday, the Chinese Foreign Ministry spokesperson Wang Wenbin stated that he was not aware of the allegations made by ASML about a former Chinese employee stealing data. ASML, a Dutch technology company, produces machines that are required to produce high-end chips that are used in everything from electric vehicles to military gear.

Following the discovery of the most recent incident, the company has initiated an internal investigation and strengthened its security controls. The potential regulatory backlash due to violated export controls could impact the company. ASML is a crucial part of the supply chain for the technology that produces the fastest and most powerful chips, making it a target for such thefts.

The recent breach of data involved technological information, but not hardware, and was carried out by a male employee in the last couple of months. The incident has been reported to US authorities, but it is unclear if the ex-employee has any connections to Chinese or other authorities. In January, the US, Netherlands, and Japan agreed to restrict exports of some advanced chip-making machinery to China to prevent them from acquiring technologies that could threaten global security.

The company based in Veldhoven is among the limited number of producers of the necessary machines for manufacturing medium to high-end semiconductors. They are the exclusive manufacturer of lithography systems that are required to reduce the size and print patterns of transistors onto silicon wafers, which are eventually sliced into individual chips.

A single machine is comparable to the size of a bus and may cost approximately $170 million. CEO Peter Wennink has cautioned that China will create its own domestic substitutes if it is unable to purchase from the Western market. ASML’s main consumers include chip makers such as Intel Corp and Taiwan Semiconductor Manufacturing Co, which then provide for companies such as Apple Inc and Nvidia Corp.

ASML has previously accused Dongfang Jingyuan Electron Ltd of acquiring and transferring their technology to China, and one engineer was accused of stealing 2 million lines of source code for critical ASML software, sharing it with employees at Dongfang and a related US company.

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