Micron says China ban unfair but won't hurt revenue

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

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

The Chinese ban on Micron targeted its products sold through retail outlets and represented only a small portion of the chipmaker's revenue. That came a month after the US company filed a lawsuit in California alleging Jinhua and UMC stole Micron's trade secrets at its Taiwan plant. 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.

UMC shares got a boost from the Chinese court ruling soon after the market opened, and while their momentum was compromised to some extent by the lingering trade friction between the United States and China, the stock still stayed in positive territory.

"UMC is pleased with today's decision", Jason Wang, the company's co-president, said in a statement.

The two chipmakers have been at loggerheads since December past year when Micron filed a civil lawsuit in the state of California, accusing UMC of secret infringement of intellectual property related to its DRAM chips. When violations occur, UMC stands ready pursue patent infringement litigation in order to obtain judgment and remedies to protect the intellectual property rights of the company.

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It said in June the case could "have a material adverse effect" on its business, requiring changes to its China operation.

Roughly one quarter of all global memory chip demand comes from China. In 2017, Micron generated about half of its $20.3 billion fiscal revenue from China.

Other semiconductor shares suffered as well on the news as the battle between Micron and China is considered a bellwether amidst a trade fight between Beijing and Washington, and China's attempt to gain advanced chip tech and knowledge.

European shares are broadly higher Wednesday, but they are losing some ground as trade tensions continue to simmer.

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It also resells flash memory products purchased from other suppliers. If the ban is enacted, Micron's competitors, including Samsung, SK Hynix, WDC, Intel, Toshiba and the new entrant YMTC would be benefited.

Others believe the ban will be short-lived.

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.

According to Wang, Micron now supplies SSD modules to Alibaba, China's largest e-retailer; Huawei, the world's third-largest smartphone maker; Tencent Holdings, a Chinese conglomerate providing internet and telecommunications services; and Baidu, China's largest search engine.

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A Chinese antitrust regulator is already investigating Micron and its Korean rivals, the companies have said.

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