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Four U.S. Engineers Charged With Trying to Steal Chip Designs for a Chinese Startup

December 7, 2017, 9:45 AM UTC

Four former Applied Materials Inc. (AMAT) engineers have been charged with attempting to steal chip designs from the semiconductor equipment company to sell to a Chinese startup.

The four U.S. chip engineers—Liang Chen, Donald Olgado, Wei-Yung Hsu, and Robert Ewald—are accused of downloading data from Applied’s internal database, which included more than 16,000 drawings. In a statement on Wednesday, U.S. prosecutors said the men’s plan was then to find funding for a startup based between the U.S. and China to compete with their former employer, reported Bloomberg.

The stolen intellectual property outlined the processes for manufacturing a high volume of chips that are used to light and electrify flat-screen TVs and smartphones.

“Applied Materials vigorously safeguards its intellectual property from theft or unlawful use,” company spokesman Ricky Gradwohl said in a statement, as reported by Bloomberg. “We support the legal action in this criminal case to ensure that anyone who obtained our trade secrets illegally is brought to justice. We cannot comment further on pending legal actions.”

The move fuels fears that China is resorting to illegal tactics it break its dependence on chip imports, threatening U.S. chipmakers and putting America’s national security at risk, according to Bloomberg. In fact, in its last few days in power, the Obama administration issued a warning about China’s push to develop domestic semiconductor technology.

“The Chinese government, motivated by economic and national-security goals, has publicly asserted its desire to build a semiconductor industry that is far more advanced than today and less reliant on the rest of the world,” the White House report says. “Its strategy relies in particular on large-scale government spending, including $150 billion in public and state-influenced non-government funds over ten years. We concluded that, while not all Chinese tactics and developments are problematic, many of them could be.”

While China is the largest consumer of semiconductors as an end market, but little of that demand is met by domestic companies, and attempts by China-related entities to acquire U.S. chip companies have been blocked by regulators, according to Bloomberg. Therefore, the world’s most populous country is now investing billions into its own local industry.