Chinese maker of chip equipment tools vows to protect its tech, innovations

Advanced Micro-Fabrication Equipment Inc China, a Chinese semiconductor equipment company based and listed in Shanghai, which is generally referred to as AMEC, said it has prevailed in the second instance of its trade secret misappropriation lawsuit in China against US chip equipment company Lam Research.

The win is significant given the current backdrop of Chinese companies making progress in crucial chip technologies and striving to build up strength in intellectual property rights amid increasingly tighter US restrictions on chip exports to China, market observers said.

In its decision of June 30, 2023, the Shanghai High People's Court ordered Lam to destroy a technical document and two photographs relating to AMEC's plasma ether that it had illegally obtained.

The court enjoined Lam and two of Lam's individual defendants from disclosing, using or permitting others to use AMEC's proprietary technical trade secrets. The court also ordered Lam to pay damages and legal costs to AMEC for its misappropriation of AMEC's trade secrets, the company said in a statement.

AMEC filed the first instance suit in the Shanghai First Intermediate People's Court in December 2010. AMEC won the first instance in March 2017.But Lam appealed to the Shanghai High People's Court. The second-instance judgment follows a six-year legal battle to protect and safeguard AMEC's intellectual property.

Gerald Yin Zhiyao, chairman and CEO of AMEC, said: "This court victory reinforces the critical importance AMEC places on protecting our intellectual property and innovation.

"Innovation is at the heart of AMEC. We have invested heavily in research and development to bring pioneering and beneficial technology to our customers around the world. At the same time, we spare no effort in protecting our proprietary technology and intellectual property."

Lam Research was not immediately available for comment on whether or not it would appeal the latest ruling in the Supreme People's Court.

AMEC makes semiconductor tools for etching and thin film deposition for semiconductor plants. Its most advanced etching tool models have been used by the world's leading chipmakers on 5-nanometer production lines, according to its 2022 annual report.

Etching and thin film deposition equipment sales accounted for about 22 percent of the global semiconductor equipment market in 2022, higher than the share of 17 percent for lithographic tools, according to the report.

Last year, AMEC's revenue rose by more than 50 percent year-on-year to 4.74 billion yuan ($657 million), generating a net profit of 1.17 billion yuan, up nearly 16 percent.

Data from the European Patent Office showed Chinese companies are building up their patent strength in semiconductors. In 2022, the semiconductor field recorded the steepest growth — 53.6 percent year-on-year — of patent applications (711) from Chinese companies, giving China second position after the United States.

"The main Chinese player in semiconductors is BOE Technology Group, which is now just behind well-established names like Intel and Samsung. We can see that Chinese companies are making determined efforts to innovate in this area," Aidan Kendrick, chief business analyst at the EPO, told China Daily.

Meanwhile, revenues of US chipmakers such as Lam Research are expected to plummet in the Chinese market because of US restrictions. Lam Research had stated earlier that US export controls may cost it up to $2.5 billion in annual sales.

Unwilling to give up in the Chinese chip market, which is the world's largest, US companies have unveiled a string of new products to meet local demand. For instance, Intel Corp unveiled its artificial intelligence chips in Beijing on Tuesday, which can help Chinese companies accelerate use of big data-based AI.