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

Eileen GuzmanJul 07, 2018

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

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

China is escalating the trade war with the U.S. while making an announcement of a ban on the sale of products of Micron, a USA semiconductor company, in China.

(Jinhua). The patent infringement claims of UMC and Jinhua were filed against Micron in retaliation for criminal indictments filed by Taiwan authorities against UMC and three of its employees and a civil lawsuit filed by Micron against UMC and Jinhua in the United States District Court for the Northern District of California for the misappropriation of Micron trade secrets.

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

The company also confirmed in a statement for the first time that two of its subsidiaries had been temporarily banned from selling some its products in China, following a complaint from rivals United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co.

Shares of Micron, which generated half of its $20.3 billion fiscal 2017 revenue from China, closed down 5.5 percent on Tuesday at $51.48. Beijing wants to change that and has set aside billions of dollars to bolster local companies.

"UMC's move to deepen ties with China and the eagerness to join the Chinese chip ecosystem could definitely help it leverage more resources and gain business interests from the nation when many emerging Chinese chip providers still need technical support from Taiwan", said Liu.

Beijing is holding up U.S. chipmaker Qualcomm's proposed $44 billion takeover of NXP Semiconductors. Only China has not yet cleared it on antitrust grounds.

The trade dispute has intensified in recent months as President Trump accused Chinese companies of stealing American technology, particularly in chips.

The ZTE crisis has intensified China's desire to slash its dependence on foreign-made computer chips. A company spokesman declined to comment further. UMC has devoted a great deal of resources and manpower to researching and developing semiconductor manufacturing technology. However, the Chinese court did not informed Micron of the decision to prohibit production and sale of by Micron, but the story was leaked from UMC, a competitor of Micron.

The ruling follows a recent raft of investigations by Chinese regulators into Micron and its South Korean rivals, SK Hynix and Samsung Electronics, on the grounds that the companies may be colluding to keep memory prices high.

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