Chinese Firms Lure ASML, Zeiss Talent with Triple Pay for Chip Tool Design Amid Sanctions

Chinese firms like Huawei are facing challenges in developing their own chipmaking technology, mainly due to a shortage of skilled professionals in specialized areas such as high-end lithography and optics. To combat this, they are actively seeking to recruit top talent from companies like ASML and Zeiss SMT, often offering substantial financial incentives, according to the Wall Street Journal.

Employees at Germany’s Zeiss SMT, known for producing optics crucial for ASML’s lithography tools, have been targeted by Huawei with offers that could increase their salaries threefold. This aggressive recruitment strategy has sparked considerable alarm regarding intellectual property theft and national security across the U.S., Europe, and Asia, leading to investigations and increased regulatory scrutiny. German authorities started probing these allegations after concerns were raised by Zeiss staff about potential technology leaks. Moreover, Huawei’s recruitment efforts have extended to other German tech companies like Trumpf, which specializes in laser amplifiers essential for chip manufacturing.

Following a U.S. mandate two years ago, American citizens and green card holders must now obtain a license to work in the Chinese semiconductor industry on specific products. This regulation led to a talent exodus from companies such as AMEC, Huawei, and Naura, the latter having begun to develop its own lithography tools. This situation has intensified the pursuit of European experts by Chinese companies, with ASML and its suppliers like Zeiss being prime targets. Dozens of engineers with advanced knowledge in optics and lithography have been recruited by Chinese companies, with reports suggesting that some have taken trade secrets with them.

Efforts to curb such recruitment have been undertaken by countries like Taiwan, South Korea, and the U.S. Taiwan, for example, has looked into approximately 90 cases of talent poaching since 2020, imposing harsh penalties, including prison sentences of up to 12 years, for divulging critical semiconductor technology. South Korea has also stepped up its penalties for unauthorized technology transfers, focusing on ex-employees who aid Chinese firms in copying sensitive tech.

Despite these measures, engineers from Asia, Europe, and even the U.S. continue to be approached by Chinese companies. Huawei, for instance, employs various tactics, including using intermediaries or local companies that mask their Chinese affiliation, in what’s known as ‘spray and pray’ recruitment strategies. These involve widespread outreach hoping to secure a few successful recruits. Given the substantial state funding behind China’s chip tool makers, they are able to offer significantly higher salaries than their Western counterparts.

While many engineers turn down these offers due to concerns over reputation and cultural differences, others accept, sometimes taking critical expertise and trade secrets with them. One notable incident involved three employees from FemtoMetrix in California, whose exit and alleged data theft nearly led to the company’s collapse, as reported by WSJ.

As these recruitment practices continue, governments are trying to find effective ways to regulate them. Taiwan, for instance, has prohibited local companies from serving as proxies for Chinese recruiters. However, broader measures to restrict such recruitment activities face obstacles, primarily due to worries about excessively regulating business operations.