China court bans Micron chip sales in patent case

Micron temporarily banned in China

Micron Stock Drops On China Court Ruling To Ban Its Memory Chips

Taiwan's United Microelectronics Corporations won its patent case brought against Micron Technology based in Idaho, in a court in China.

Shares in the sector had been shaken on Tuesday by the first reports of the ruling, which added to a growing list of intellectual property disputes between Washington and China in the technology sector. "Micron believes the ruling issued by the Fuzhou Court in Fujian Province is inconsistent with this proclaimed policy". In January, UMC filed a patent infringement lawsuits against Micron.

The dispute follows a ban on US firms supplying parts to China's telecom equipment maker ZTE as well as the drawn-out wait for Chinese regulators to approve Qualcomm Inc's $44 billion takeover of NXP Semiconductors.

Micron is the world's fourth-biggest semiconductor supplier by sales revenue following South Korean firms Samsung and SK Hynix and USA chip giant Intel.

Micron's head of legal affairs, Joel Poppen, said the company was "disappointed" with the injunction, saying Micron hadn't had a chance to present its defense in court.

However, today Micron reiterated its quarterly sales guidance, emphasizing that the injunction would only impact its overall sales by 1%. A company spokesman declined to comment further.

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In its civil complaint in December, Micron accused UMC of attempting to recruit high level personnel in Taiwan and entice former staff at Micron Taiwan to steal files which could help Jinhua, at the time little-known, to jumpstart China's campaign of developing its own technology for chips. UMC has not commented on the poaching allegations.

Micron and UMC have been at loggerheads over the issue of stealing trade secrets in the Chinese court since a year ago.

On the demand front, Chinese domestic market is expected to consume around 26% of the DRAM bit output of Micron, and 20% of global DRAM bit output in 2018 as China remains the world's second-largest economy. "This is an opportunity for SK Hynix and Samsung, because the banned products are not what the Chinese can make on their own".

UMC shares rose as much as 3.9 percent on Wednesday, before ending unchanged. "So they have to import anyway", Greg Roh, an analyst at Hyundai Motor Securities, told Reuters in an interview.

And if Chinese chipmakers advance to the technological capabilities of South Korean chipmakers in the future, "there could be a stronger pressure or sanction on Korean companies", akin to the Micron ban, the insider said.

Shares of Micron, which generated half of its $20.3 billion fiscal 2017 revenue from China, closed down 5.5 percent on Tuesday at $51.48.

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