Advantest Secures $20 Million Payment and Contract Changes in Arbitration Against AEM, Lattice, & Former Vice President, Samer Kabbani

TOKYO, Japan – August 4, 2023 – Leading semiconductor test equipment supplier Advantest Corporation (TSE: 6857), through its subsidiaries Advantest America, Inc. and Advantest Test Solutions, Inc. has secured a settlement in an arbitration against AEM Holdings Ltd., Lattice Innovation, Inc., and Samer Kabbani (collectively, "AEM"). Among other terms of the settlement, AEM must pay $20 million to Advantest and immediately terminate any exclusivity provisions that previously blocked Advantest from working directly with a sub-supplier.

Furthermore, Advantest, which has a robust and growing IP portfolio of patents and trade secrets covering its thermal control, active thermal interposer, and wafer active thermal interposer technology, did not license any of its IP to AEM as part of the settlement and remains free to assert any claims for IP infringement against AEM in the future.

Advantest filed the arbitration alleging that Kabbani, while working full-time as an Advantest Test Solutions, Inc. Vice President, was also serving as the CEO, board member, and a principal owner of a side business, Lattice; inserted Lattice into Advantest's supply chain without disclosing his active involvement in Lattice; and, further, arranged to have a sub-supplier locked into an exclusivity contract with Lattice, which allowed Lattice to gatekeep Advantest's access to that sub-supplier. AEM then hired Kabbani as its Chief Technology Officer and purchased Lattice. Advantest brought claims in the arbitration against Kabbani, AEM, and Lattice.

Advantest filed the arbitration to secure its supply chain, to ensure continuity for its customers, to protect its intellectual property, and to obtain monetary relief for past harms. The arbitration settlement, parts of which will soon be made public in an arbitral award filed in a California court, accomplishes all three goals. In addition to the $20 million payment, the settlement:

• Terminates any and all exclusivity provisions between Lattice and a supplier of thermal components, and prohibits AEM, Lattice, and Kabbani from ever again "impos[ing] any contractual terms or other impediments that would prevent, inhibit, make more expensive, or otherwise govern any relationship between Advantest" and the supplier in the future.
• Confirms that all relevant work product "was and is work made for hire that belongs to Advantest and that Advantest owns all IP created in the course of such work made for hire."
• Reserves all of "Advantest's rights with respect to the ownership and infringement of any other IP," meaning Advantest remains free to take further legal action to against AEM, Lattice, or Kabbani to resolve any violations of its intellectual property.

"We are pleased by the outcome of the arbitration, and believe its terms—many of which are public by design—will send a strong message that this kind of conduct will not be tolerated," explained Advantest America CEO, Keith Hardwick. "Advantest will always do everything in its power to protect its supply chain and robust portfolio of thermal control, active thermal interposer, and wafer active thermal interposer patents and trade secrets, none of which is licensed to AEM."

About Advantest Corporation

Advantest (TSE: 6857) is the leading manufacturer of automatic test and measurement equipment used in the design and production of semiconductors for applications including 5G communications, the Internet of Things (IoT), autonomous vehicles, high-performance computing (HPC), including artificial intelligence (AI) and machine learning, and more. Its leading-edge systems and products are integrated into the most advanced semiconductor production lines in the world. The company also conducts R&D to address emerging testing challenges and applications; develops advanced test-interface solutions for wafer sort and final test; produces scanning electron microscopes essential to photomask manufacturing; and offers system-level test solutions and other test-related accessories. Founded in Tokyo in 1954, Advantest is a global company with facilities around the world and an international commitment to sustainable practices and social responsibility. More information is available at www.advantest.com.

Note: All information supplied in this release is correct at the time of publication, but may be subject to change.