China court 'bans sales' of chips from USA firm Micron

Jul 07, 2018, 03:58
China court 'bans sales' of chips from USA firm Micron

The decision came after Taiwan-based chipmaker United Microelectronic Corporation (UMC) sued Micron for patent infringement.

The Fuzhou Intermediate People's Court issued a preliminary sales injunction against Micron that prevents it from selling the chips, including DRAM chips and NAND flash memory chips, in China, UMC said in a statement late on Tuesday.

This prompted UMC to countersue on January 12, filing a patent infringement lawsuit against Micron at the Fuzhou Intermediate People's Court.

Shares of Micron and other US chipmakers fell on Tuesday after UMC said a court in China ruled in its favor and temporarily banned Micron from selling chips in the mainland.

A Chinese court has temporarily halted a USA memory chip maker from selling its semiconductor products in China, a move that could further intensify the ongoing trade dispute between Beijing and Washington.

As such, Micron may drop further as the downward pressure from two cycles converge, possibly into October.

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

Micron is the world's fourth-biggest semiconductor supplier by sales revenue following South Korean firms Samsung and SK Hynix and U.S. chip giant Intel.

The ban comes amid an escalating trade spat between Washington and Beijing that is spurring China to accelerate its goal of developing its own domestic chipmakers to curb the heavy reliance on US firms like Micron and Qualcomm Inc (QCOM.O). An official who answered a call to the court's news office confirmed the existence of an injunction order on Micron, but said details of the ban would not be made public because the case is still ongoing.

Roughly one quarter of all global memory chip demand comes from China.

As of 11:42 a.m., shares of UMC had gained 0.56 percent to NT$18.05 (US$0.58), with 81.87 million shares changing hands, outperforming the broader market index, which was down 0.12 percent at 10,702.91.

Among the remedies it sought was to stop Micron from making, importing or selling the allegedly infringing products and also destroy all inventory and pay compensation.

As China accounted for about 50 percent of Micron's revenue in 2017, the ruling sent Micron shares plunging by 5.5 percent on Wall Street overnight.

Other chipmakers also gained. Intel and Broadcom closed down 1 per cent. The ban applies to its subsidiaries Micron Semiconductor (Xi'an) Co Ltd and Micron Semiconductor (Shanghai) Co Ltd.