By James Titcomb

The boss of a Chinese chipmaker has been accused of spying on one of the world's biggest microchip companies and stealing trade secrets.

ASML, the Dutch company whose equipment is used to manufacture cutting edge semiconductor circuits, said Zongchang Yu, a former employee, had transferred trade secrets to Dongfang Jingyuan Electron, a Chinese company supported by the country’s Communist party.

Mr Yu, the company's chief executive, is wanted in California on charges that he stole technology from ASML. He worked for the company in the US until 2012 before founding Dongfang two years later.

ASML is the world’s only manufacturer of extreme ultraviolet lithography machines, which can cost up to €150m (£128m) and be as large as a bus. They are used to etch microscopic circuits on to silicon wafers, allowing for the most intricate and powerful microchips used today.

The company’s status has made it a key weapon in US efforts to tackle the rise of Chinese technology companies. ASML has been prevented from selling its machines directly to Chinese companies, because the machines rely on American-made software.

Without the company’s machines, China is forced to rely on older technology, and has struggled to catch up.

ASML revealed its dispute with Dongfang in its annual report, which linked the company to Xtal, a defunct Silicon Valley company also set up by Mr Yu in 2014.

Legal filings uncovered by Bloomberg showed that ASML successfully sued the US organisation in 2018, causing it to fall into bankruptcy when it could not pay an $845m (£673m) bill.

However, by that point, Mr Yu had moved to Beijing. “It is a plot to get technology for the Chinese government,” ASML had told the California court. The court had heard that Dongfang and Xtel recruited multiple engineers from ASML, one of whom stole around 2m lines of code from the company.

The legal dispute related to technology known as optical proximity correction, software that allows for more accurate circuit printing.

US officials have accused China of a pattern of illegally obtaining microchip technology from Western companies. The country’s ministry of foreign affairs told Bloomberg: “China didn’t make its technology achievements by stealing or robbing from others.”

The claims come as the Chinese-backed takeover of Newport Wafer Fab, Britain’s largest microchip facility, is reviewed in the UK. Nexperia, owned by China’s Wingtech, could be forced to sell the company if it is deemed a national security concern.