ASML, one of the largest suppliers to the global semiconductor industry and the only supplier of extreme ultraviolet (EUV) lithography photolithography machines, has revealed that a former employee in China stole information pertaining to its proprietary technology in a data breach. Within its recently published 2022 annual report, the Dutch tech firm said it had discovered “unauthorized misappropriation of data” that was promptly investigated in an internal review.

ASML is a significant cornerstone of the global technology supply chain, controlling over 90 percent of the global market for chipmaking lithography equipment as of 2021, according to a study by Gartner (seen via Bloomberg). More crucially for anyone with a fancy phone or laptop, ASML is also the world’s only supplier of EUV lithography machines. These specialized lithography machines are required to create the world’s most advanced semiconductors produced by global chip manufacturers like TSMC and Intel.

Based on its initial findings, ASML doesn’t believe that the misappropriated data will be detrimental to its ongoing business but acknowledges that some “export control regulations” may have been violated. The data breach has since been reported to the relevant authorities, and ASML is “implementing additional remedial measures in light of this incident.”

The firm did not expand on what information may have been compromised, nor did it disclose when this breach occurred. This marks the second time in as many years that ASML has reported having its data stolen by entities based in China, having accused Beijing-based tech firm DongFang JingYuan Electron of intellectual property theft in its 2021 annual report.

China’s alleged involvement with ASML’s trade secrets is notable given a recent agreement between the governments of the US, the Netherlands, and Japan that restricts the export of advanced chipmaking machinery to the country. The terms of this agreement have not been disclosed but follow earlier pressure from the US in 2018 that persuaded the Dutch government to withdraw ASML’s license to export its EUV machines to China. Despite China being ASML’s third-biggest market after Taiwan and South Korea, the US has now banned the sale of these EUV machines to China, which has affected ASML and the Netherlands.

ASML’s chief executive officer, Peter Wennink, has previously expressed concerns over restrictions being placed on the company’s business dealings with China. “If you shut out the Chinese with export control measures, you’ll force them to strive toward tech sovereignty, in their case real tech sovereignty,” said Wennink in an interview with Politico. “In 15 years’ time, they’ll be able to do it all by themselves — and their market [for European suppliers] will be gone.”