China court bans Micron chip sales in patent case: Taiwan's UMC

07 July, 2018, 11:01 | Author: Mary Valdez
  • U.S. Stock Market

In a patent ruling in favour of UMC, the Fuzhou Intermediate People's Court of the People's Republic of China issued a preliminary injunction stopping Micron from selling 26 products, including dynamic random access memory and Nand flash memory-related products, UMC said on Tuesday.

USA chipmaker Micron Technology Inc said on Thursday a temporary Chinese ban on a patent infringement lawsuit against the company would hurt its quarterly revenue by 1 percent.

However, today Micron reiterated its quarterly sales guidance, emphasizing that the injunction would only impact its overall sales by 1%. It predicted this will not affect its outlook for the August-ending fiscal Q4 of $8 billion to $8.4 billion. Taiwanese rival United Microelectronic Corporation (UMC) released a statement yesterday revealing the news, which saw shares in the American firm fall by as much as 8 percent.

"The central government of China has often stated that the rights of foreign companies are fairly and equally protected in China", the company said, adding that it believed the ruling to be "inconsistent with this proclaimed policy".

The ruling by the Chinese court is likely to fuel trade tensions between China and the United States, unleashed by President Donald Trump, who accuses China of stealing USA intellectual property.

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Micron and UMC have been at loggerheads over the issue of stealing trade secrets in the Chinese court since previous year. In January, UMC filed a patent infringement lawsuit against Micron in China. Micron's shares dropped on Tuesday as a result but they have bounced back in Thursday's session after it came to light that this would have a minimal effect on its fourth-quarter revenues. UMC's case included requests that Micron stop making, importing, or selling these products.

The ban, along with a separate antitrust probe by China in early June against Micron and two South Korean chipmakers, SK Hynix and Samsung Electronics, are all "politically connected and intertwined", said Arisa Liu, an analyst with Taiwan Institute of Economic Research, a leading nonprofit think tank in Taiwan, in an interview with Japanese magazine Nikkei Asian Review.

Micron claimed ignorance about the ruling, saying it had not seen any paperwork from the Chinese court.

The Micron ban could be a major opportunity for other global chipmakers to step in.

In Taipei, shares of Nanya Technology Corp., a close business partner of Micron, had fallen 0.61 percent to NT$81.30 as of 11:42 a.m., Wednesday.

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