Beijing E-Town Semiconductor Technology Co. sued Applied Materials, Inc. (NASDAQ:AMAT), a U.S. chip-equipment supplier, in the Beijing Intellectual Property Court, accusing the latter of stealing trade secrets.
E-Town alleged that Applied Materials illegally obtained, used, and disclosed core plasma-source wafer treatment technologies.
The Chinese company alleged that Applied Materials hired two former employees from E-Town’s U.S. subsidiary, Mattson, who had access to proprietary plasma technology, Bloomberg reported on Wednesday, citing regulatory filings.
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E-Town is seeking a court order to stop Applied Materials from using the disputed trade secrets, destroy related materials, and pay 100 million Chinese yuan ($13.9 million) in damages.
The dispute unfolds against the backdrop of heightened U.S.-China tech tensions. Washington has already curbed China’s access to advanced chipmaking tools from Dutch supplier ASML Holding (NASDAQ:ASML), which depends on U.S. technology from companies including Applied Materials and Lam Research (NASDAQ:LRCX).
The litigation also echoes a 2022 case in which Applied Materials sued Mattson for alleged corporate espionage, allegations that Mattson denied.
China remains a critical market for Applied Materials, accounting for 37% of its fiscal 2024 revenue and 27% in fiscal 2023, according to company filings.
However, analysts warn that U.S. tariffs could weigh heavily on near-term results. KeyBanc Capital Markets’ Steve Barger estimates the levies could cost the company roughly $400 million in fiscal 2025, with half of that impact likely hitting in the second quarter. He projects China’s share of revenue could drop to about 25% this quarter.
The lawsuit comes just days after Washington and Beijing extended their trade truce by 90 days, avoiding a new round of tariffs. The agreement maintains a 30% U.S. levy on Chinese imports and a 10% Chinese tariff on U.S. goods.
Applied Materials shares have risen 17% year-to-date, outpacing the Nasdaq 100 Index’s 14% gain, as surging AI investment from major tech firms drives demand for semiconductor manufacturing equipment.
Price Action: AMAT stock is trading lower by 0.12% to $189.81 premarket on Wednesday.
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