Patent Dispute

Micron confirmed on Thursday a court in China has granted a preliminary junction that bans its Chinese subsidiaries from manufacturing and selling some of its products in the Asian country.

The company said the affected products represent “slightly more than 1 percent” of its annual sales. Micron added the injunction will hurt its current fiscal fourth quarter revenue by “approximately” 1 percent, but the chipmaker continues to expect sales to be within the previously guided range of $8 billion to $8.4 billion.

United Microelectronics Corporation (UMC) and Jinhua sought the sales ban, alleging that Micron violated its patent rights in China. UMC and Micron have gone back and forth in the courts, alleging various intellectual property violations.

The case is part of a broader dispute between the two companies centering on accusations that UMC acted as a conduit for the theft of Micron’s designs in an attempt to help China grow its domestic chip industry and replace imports that rival oil in total value. A Chinese antitrust regulator is already investigating Micron and its Korean rivals, the companies have said. Local media has reported that authorities are looking into increases in chip prices.

Last year, Micron sued UMC and its partner Fujian Jinhua Integrated Circuit Co., claiming they stole memory chip trade secrets. China accounted for more than 50 percent of Micron’s revenue in fiscal 2017, according to company data. China is the largest market for semiconductors yet isn’t home to even one of the top 10 producers of the crucial electronic components. The memory chip market has been increasingly concentrated in the hands of Micron and its two Korean rivals, Samsung Electronics Co., and SK Hynix Inc. They have generated record profits recently from the components that are essential to everything from supercomputers to smartphones.

 

Keep those stops tight

Todd “Bubba” Horwitz