Micron Says China Ban Won't Hurt Earnings But Ruling Is Unfair

Adjust Comment Print

Micron announced that the Fuzhou Intermediate People's Court, Fujian Province, China today notified two Chinese subsidiaries of Micron that it has granted a preliminary injunction against those entities in patent infringement cases filed by United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co. Washington says the measures are a response to intellectual property theft by China. "The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense", said Joel Poppen, senior vice president, legal affairs, general counsel and corporate secretary at Micron Technology.

China is escalating the trade war with the U.S. while making an announcement of a ban on the sale of products of Micron, a USA semiconductor company, in China.

China's aim may not be to bar shipments of Micron's chips, instead the ruling may be part of a strategy to push it into a partnership with Chinese semiconductor makers, which could speed up the country's internal chip industry development, according to Stifel Nicolaus analyst Kevin Cassidy.

Adding to the mess, China's government recently said it was investigating claims of price-fixing by Micron and its South Korean rivals Samsung Electronics Ltd. and SK Hynix Inc., which together make up the world's three largest flash memory companies.

Micron said it would not comment further until it had reviewed documentation from the Fuzhou Intermediate People's Court of China. The court declined to comment on the case and said injunctions were not posted publicly. Micron will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners. That came a month after the USA company filed a lawsuit in California alleging Jinhua and UMC stole Micron's trade secrets at its Taiwan plant.

In its filing, Micron said UMC, which is scaling up its China business and plans to list on the Shanghai Stock Exchange, had poached key Micron employees with the aim of helping Fujian Jinhua improve its own DRAM technology.

China is the largest importer of memory products, consuming 20 percent of the world's DRAM, as it has yet to build up its nascent chip industry.

UMC shares rose as much as 3.9 percent on Wednesday, before erasing a chunk of the gains to be up 1 percent. "So they have to import anyway", Greg Roh, an analyst at Hyundai Motor Securities, told Reuters in an interview.

As China accounted for about 50 percent of Micron's revenue in 2017, the ruling sent Micron shares plunging by 5.5 percent on Wall Street overnight.

Comments