Taipei/San Francisco — A Chinese court temporarily banned Micron Technology chip sales, cutting the US company off from the world’s largest semiconductor market, Taiwanese rival United Microelectronics Corp said.
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.
Micron said it had not been served with the injunction and would not comment until it was. Shares in the Boise, Idaho-based company dropped as much as 8%.
UMC took legal action against Micron in January, alleging that the US company infringed on patents in China related to memory storage and other products.
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.
UMC declined to provide a copy of the court’s decision. 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.
Shares of UMC rose as much as 3.9% in Taipei while Micron slumped 5.5% in New York.
The case is part of a broader dispute between the two companies centring on accusations that UMC acted as a conduit for the theft of Micron’s designs in an attempt to help China grow its domestic chip industry and replace imports that rival oil in total value.
A Chinese antitrust regulator is already investigating Micron and its Korean rivals, the companies have said. Local media has reported that authorities are looking into increases in chip prices.
Last year Micron sued UMC and its partner, Fujian Jinhua Integrated Circuit Co, claiming they stole memory chip trade secrets.
China accounted for more than 50% of Micron’s revenue in financial 2017, according to company data.
China is the largest market for semiconductors, yet isn’t home to even one of the top 10 producers of the crucial electronic components.
The memory chip market has been increasingly concentrated in the hands of Micron and its two Korean rivals, Samsung Electronics and Hynix. They have generated record profits recently from the components, essential to everything from supercomputers to smartphones.
The Micron ban escalates a trade dispute between China and the US that’s engulfing industries from steel to autos and increasingly also the electronics sector, where the two countries’ economies are heavily intertwined. US President Donald Trump has railed against Chinese companies for allegedly stealing US companies’ intellectual property
China’s Huawei Technologies and ZTE are fighting US government action that threatens to cut them off from US suppliers and potential customers.
On Monday, the US moved to block China Mobile, the world’s largest mobile phone service provider, from entering the US market, citing national security grounds.
Meanwhile, Qualcomm is still waiting for permission from Chinese regulators to complete its acquisition of NXP Semiconductors. That deal was scheduled to be closed at the end of last year and has been approved everywhere else in the world.
While their governments fight, companies face potential disruption of a complex supply chain that produces most of the world’s smartphones, computers and their components.
For example, Qualcomm designs its chips at its San Diego headquarters, then has them manufactured in countries including Taiwan and Korea.
The semiconductors then become the most important electronic parts in phones that are mostly made in China and then sold worldwide.
Bloomberg
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