Another victim of the on-going trade war between the United States and China is the US-based semiconductor company, Micron Technologies.
A Chinese court has decided to temporarily ban some sales by Micron Technology Inc. in China. This decision was taken in a patent infringement lawsuit. The decision prevents company’s China subsidiaries from selling some of its products in the country.
The lawsuit was filed by Micron’s Chinese rival United Microelectronics Corporation (UMC) along with Fujian Jinhua Integrated Circuit Co., at the Fuzhou Intermediate People’s Court in Fujian province of China. The decision bans the company from selling 26 of its products which includes dynamic random access memory, NAND flash memory chips, and solid-state drives.
This adds to a number of other cases where world’s chipmaking giants are finding it increasingly harder to operate in the world’s biggest market for semiconductors. This is due to many reasons, the trade war that’s going on between the United States and China is one of them. Other than that, China’s own ambitions in this sector also make foreign companies a bit undesirable in the country as they seek to lower their dependence on foreign companies. Micron is currently being probed by the antitrust authorities.
Earlier, Micron and Taiwanese Authorities had filed criminal and civil lawsuits against UMC and three of its employees for the misappropriation of Micron trade secrets. Micron believes that this lawsuit is just a revenge tactic from UMC because of those earlier lawsuits they had filed.
Financially, this ban wouldn’t hurt Micron too much though. The ban is targeted at the products sold through their retail outlets and represent a very small portion of its revenue. The ban will affect only about 1 percent of Micron’s total revenue this quarter. Micron said that it expects this quarter’s revenue to be within the previously estimated range of $8 billion to $8.4 billion.
Micron shares took a fall of 5.5 percent when the news of the ban became public but it recovered by 1.9 percent at $52.46 on Thursday. The ban proved to be beneficial for other chipmakers. Qualcomm shares rose 3.2 percent, Broadcom shares rose 2 percent and Intel shares rose by 2.6 percent.
Joel Poppen, Senior Vice President of Legal Affairs, General Counsel, and Corporate Secretary said in a press release, “Micron is disappointed with the ruling by the Fuzhou Intermediate People’s Court. We strongly believe that the patents are invalid and that Micron’s products do not infringe the patents. The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense. This ruling and other actions by the Fuzhou Court are inconsistent with providing a fair hearing through appropriate legal processes and procedures. Micron has a long-standing history of successful business operations in China, including a significant assembly and test manufacturing facility in Xi’an, as well as deep relationships with many valued China customers. Micron will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners.”
Although China is the biggest semiconductor market in the world, it doesn’t home even a single company out of the world’s top 10 chip producers. The market is dominated by Micron and it’s Korean rivals, Samsung Electronics and SK Hynix. All three of these companies are currently being investigated by Chinese regulators.