Micron Technology, Inc. (MU) Loses China Case, Memory Chip Sales Blocked

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

However, the Chinese court did not informed Micron of the decision to prohibit production and sale of by Micron, but the story was leaked from UMC, a competitor of Micron.

The two chipmakers have been at loggerheads since December when Micron filed a civil lawsuit in the state of California, accusing UMC and its state-backed Chinese partner Fujian Jinhua Integrated Circuit Co of stealing design and manufacturing technologies related to its DRAM chips.

UMC, a foundry that does not make mainstream memory products, has not commented on the poaching allegations and the case is still being heard.

The Micron ban escalates a trade dispute between China and the USA that's engulfing industries from steel to autos and increasingly also the electronics sector, where the two countries' economies are heavily intertwined.

The ruling follows a recent raft of investigations by Chinese regulators into Micron and its South Korean rivals, SK Hynix and Samsung Electronics, on the grounds that the companies may be colluding to keep memory prices high.

Last December, Micron filed a lawsuit against UMC in the Northern District Court of California of the USA, claiming that UMC violated intellectual property rights by copying its memory patents and trade secrets.

In January 2018, UMC and Jinhua filed patent infringement suits in Fujian Province, China against Micron's China subsidiaries.

"I think that China is using this case as a payback against the USA", said Ho in an interview with the Taiwan branch of New York-based broadcaster New Tang Dynasty Television.

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US analysts who have been recommending Micron's stock as it racks up record profits amid one of the strongest periods of demand in the memory chip industry's 50-year history, expressed relief at Micron's analysis.

China accounted for more than 50% of Micron's revenue in financial 2017, according to company data.

The stock is responding favorably, up $1.79, or 3.5%, at $53.27, in early trading.

Other chipmakers also gained. "So they have to import anyway", said Greg Roh, an analyst at Hyundai Motor Securities.

The judgment issued on July 3rd not only banned the sales of some Micron-branded and Crucial-branded products in China, but also ordered Micron's IC assembly/testing plant in Xi'an to halt operation; Micron Technology (Shanghai) Co., Ltd. has also been ordered to cease sales.

The Court has not yet indicated when a final ruling on the case can be expected, nor for how long the injunction on sales is valid.

Meanwhile, Micron's ban could put pressure on Chinese companies and thus hike up the price on some domestic-made chips, said Wang Yanhui, secretary general of China Mobile Alliance, in an interview with Chinese business newspaper 21st-Century Business Herald. These Chinese companies would all need to find another supplier to meet their demand.

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