Micron Says China Ban Won't Hurt Earnings But Ruling Is Unfair

07 July, 2018, 04:04 | Author: Gerard Cortez
  • Micron temporarily banned in China

Then, UMC counterpunched. In January this year, UMC filed a lawsuit against Micron in the court of Fuzhou City, China, demanding 270 million yuan (US$40.5 million) in compensation, claiming that Micron infringed upon its DRAM technology patents.

Micron, which gets a chunk of its revenues from China, said it had not been served with the injunction and would not comment further until it had reviewed documentation from the Chinese court.

China's aim may not be to bar shipments of Micron's chips, instead the ruling may be part of a strategy to push it into a partnership with Chinese semiconductor makers, which could speed up the country's internal chip industry development, according to Stifel Nicolaus analyst Kevin Cassidy.

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.

Back in December 2017, Micron filed a civil lawsuit in California, accusing UMC and its Chinese partner Fujian Jinhua Integrated Circuit of stealing design and manufacturing technologies related to its DRAM chips.

Micron reiterated its fiscal fourth quarter revenue forecast of $8 billion to $8.4 billion. Joel Poppen, Micron's general counsel, added that it "will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners". UMC's case included requests that Micron stop making, importing, or selling these products.

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

The Micron ban escalates a trade dispute between China and the United States that's engulfing industries from steel to autos and increasingly also the electronics sector, where the two countries' economies are heavily intertwined.

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

USA analysts who have been recommending Micron's stock as it racks up record profits amid one of the strongest periods of demand in the memory chip industry's 50-year history, expressed relief at Micron's analysis. UMC shares jumped more than 3% in morning trading in Taiwan on Wednesday but ended the day flat.

The Micron ban could be a major opportunity for other global chipmakers to step in. When the ban on the sale of Micron products in China is realized, the ban is expected to benefit the Korean semiconductor industry.

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