Micron chip sales banned in China in patent dispute with Taiwan's UMC

Memory chip parts of U.S. memory chip maker Micron Technology are

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

The Fuzhou Intermediate People's Court issued a preliminary sales injunction against Micron that prevents it from selling the chips, including DRAM chips and NAND flash memory chips, in China, UMC said in a statement late on Tuesday. This led to the preliminary injunction, which would stop Micron from selling 26 products in China. Then, UMC counterpunched. In January this year, UMC filed a lawsuit against Micron in the court of Fuzhou City, China, demanding 270 million yuan (US$40.5 million) in compensation, claiming that Micron infringed upon its DRAM technology patents.

The dispute follows a ban on USA 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. A company spokesman declined to comment further. The patents are not used in Micron's DRAM and NAND technology or products, and UMC and Jinhua rely on distorted interpretations of the patents and improper evidence to support their false allegations that Micron infringes the patents.

The ban comes amid an escalating trade spat between Washington and Beijing that is spurring China to accelerate its moves to develop domestic chipmakers in order to reduce its heavy reliance on USA firms like Micron and Qualcomm, another US -based chip maker. According to Taiwanese business news site CnYes, in 2017, China's top source of semiconductor imports was Taiwan, providing 36.7 percent of them. Joel Poppen, Micron's general counsel, added that it "will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners". Investors found comfort in the affirmation, pushing shares higher. Micron still has the right to appeal, and the follow-up of this case is bound to become the focus of the global memory industry amid the critical stage for the US-China trade war. The judgment will have significant impacts on the sales of products under Micron's own brand or the Crucial brand in China.

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China represents about one quarter of the worldwide sales of memory chips, while half of the revenue generated by Micron is from sales in China, with an additional 12.5% from sales of chips in Taiwan. If the ban is enacted, Micron's competitors, including Samsung, SK Hynix, WDC, Intel, Toshiba and the new entrant YMTC would be benefited.

China is the largest market that accounts for 65% of world semiconductor trade. He believes the antitrust investigation on SK Hynix and Samsung Electronics demonstrated that Chinese authorities intend to "hold Korean semiconductors in check".

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