A major Dutch news organization has been digging into details regarding the 'unauthorized embezzlement', that ASML informed shareholders about last year. According to NRC’s investigations, the incident could be more accurately described as the theft of trade secrets and the passing of them to China’s Huawei.

The timeline, according to the source report, goes something like this:

• Chinese national works at ASML and gains knowledge of some of the Dutch firm’s trade secrets,

• Chinese employee leaves ASML in 2022,

• This former-ASML employee starts work at Huawei,

• ASML company secrets shared with Huawei.

In its 2022 annual report, ASML mentioned that it had been a victim of 'unauthorized embezzlement.' If the NRC report is correct, that is ASML’s euphemism for being a victim of trade secret thefts.

In 2023, ASML CEO Peter Wennink told investors that the stolen information was quite limited. Wennick described the IP theft as “one piece of a puzzle you don't have the box for.” No details were shared regarding the Huawei connection, which has been uncovered by NRC and its multiple sources. ASML insists that its internal security is now much tighter, implying there couldn’t be a repeat of the IP theft today.

Back in Feb, Bloomberg reported that an ex-ASML employee stole chipmaking tool information and took it to China. However, that report didn’t point the finger at Huawei as the stolen data beneficiary.

We have previously reported on tactics Huawei is employing to prosper in the face of US-led sanctions on China. Recently we observed that Huawei was still operating and hiring in Russia. Moreover, the firm is trying to scalp Taiwanese talent and is doing all it can to support China’s AI ambitions.

Such actions seem to have helped Huawei stay alive and even thrive, as evidenced by its sanctions-busting new HiSilicon Kirin 9000s SoC, and its progress with developing and acquiring chip-making equipment.

It is difficult to know if the US tech sanctions are the best policy against the increasingly belligerent China. On the one hand, the sanctions should help restrict cutting-edge tech that could be used to develop or be integrated into weapon systems. On the other hand, China could be spurred to develop (or steal) homegrown tech, which may one day rival the best from the US and its allies.