Chinese-American chip designer loses bid to have trade-secret conviction tossed over racism claim

After working for two American semiconductor firms for over a decade, Yu, a physics major from China’s prestigious Tsinghua University, started his own chip design business in 2017.

Acting on a tip from the owner of a competing chip firm about something “a bit fishy”, federal agencies investigated Yu, and the Justice Department eventually brought those 21 counts.

The ADI design Yu was found to possess illegally is for a chip used in aerospace and military applications. Yu’s defence has maintained that once a chip is in the market anyone can look at it with a microscope and discern its features, meaning the design is not a secret.

Yu’s lawyer, William Fick, argued on Thursday that similar disputes between employers and employees were usually handled in the civil courts. The criminal case, Fick contended, was pursued against Yu “based on implicit or conscious bias” because he was Chinese.

The FBI had contended that Yu had a “strong nexus to the People’s Republic of China”, but, Fick said, that nexus was negligible: China is Yu’s country of origin; he earned a degree 18 years ago in Beijing; and he visited his parents and in-laws in China.

Yu was accused of unlawfully possessing trade secrets, but prosecutors could win just the one count. Fick noted that a chip design Yu was accused of stealing was freely available on the internet since 2011.

And early in the case, federal prosecutors had wrongly identified Yu as a Chinese citizen although he became a naturalised US citizen in 2017.

Fick told the court that an overwhelming number of defendants in intellectual property cases were of Asian descent, pointing out that a second tip against Yu – this one by ADI – complained that his company’s datasheets copied its formats from ADI. He argued that there were no intellectual property rights on formatting.

While rejecting Yu’s plea to throw out the conviction, Judge Young observed, “I would be blind myself to say there was no implicit bias here.

“I can conclude with certainty that it didn’t help his case.”

The judge noted from the bench that since 2016 racist incidents in the US had risen, largely directed at people of Asian descent and that the bigotry was largely driven by fears of some “other group” posing a perceived threat.

But, he added, given concerns regarding China’s autocratic political system, human rights violations against its Uygur Muslim population, aggression in the South China Sea, increasingly bellicose attitude toward Taiwan, and perceived threats to US cybersecurity, “we would be second-guessing law enforcement officers if they didn’t take any action”.

Judge Young added: “They would have done the same if it was a John Smith Caucasian” since China is perceived as “inimical” to the US.

The case was referred to the US attorney’s office under the Justice Department’s China Initiative, the programme set up during the Donald Trump administration to combat theft of American secrets and technology by China.

The department cancelled the initiative last year after multiple spying-related cases against Chinese scientists and scholars working at American universities were thrown out by federal courts due to lack of evidence.

Several members of the Boston-area Asian-American community attended Yu’s hearing on Thursday, anxious about the China-US rivalry hurting their businesses and families.

Helen Yang, a Tsinghua University alumna, said that the fact that China became a “focal point” of the hearing was a concern in itself.

“Chinese-Americans are Americans first and foremost, and we should not become victims of geopolitical tensions,” she said after the hearing. People often confuse Chinese-Americans with Chinese nationals, she noted, and Chinese nationals with the Chinese government.

“When we become US citizens we are promised equal opportunities but we are held responsible for a foreign country’s actions,” said Yang, who came to America in 1995 when the US recruited global talent in the STEM disciplines and China was a big target.

“Out of my undergraduate class of 31 students at Tsinghua, about half of them are in the US – many of them in the semiconductor industry,” she added.

Wei Han, a friend of Yu who has known him for seven years, said that the judge had drawn an “irrational linkage” with China to Yu’s case.

“It sets a bad precedent,” he lamented, adding that the case had instilled fear in the Chinese-American community.

Yu faces up to 10 years in federal prison and US$250,000 in penalties. Judge Young is scheduled to sentence Yu on May 3o; the defence is likely to appeal to a higher federal court.

After the hearing, as supporters and friends began saying their goodbyes, Yanzhi Chen stood stiff in disappointment, fighting back tears. With a nervous smile she hoped for some leniency in the sentencing.

In October, she created a GoFundMe account to fund Yu’s legal expenses. So far it has collected more than US$34,000.

“This case has completely destroyed our lives,” she said.