Micron stock falls after Chinese court bans sale of its memory chips

Daniel Fowler
July 7, 2018

The Street is mulling the disclosure Tuesday that Micron Technology's (MU) chips have temporarily been banned in China.

Micron Technology Inc said on Thursday a temporary Chinese ban on a patent infringement lawsuit against the US chipmaker would hurt its fourth-quarter revenue by just 1 percent, stemming concerns of a bigger impact.

Micron said it had not received the injunction and could not comment. This led to the preliminary injunction, which would stop Micron from selling 26 products in China. It predicted this will not affect its outlook for the August-ending fiscal Q4 of $8 billion to $8.4 billion. Further information regarding these and other risks is included in UMC's filings with the U.S. Securities and Exchange Commission, including its registration statements and reports on Forms F-1, F-3, F-6 and 20-F and 6-K, in each case as amended.

Last year, Micron filed suit again UMC, alleging that UMC stole memory technology from the company and transferred it to Jinhua Integrated Circuit Co., a DRAM maker in China. 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.

It comes amid an escalating trade spat between Washington and Beijing over tariffs and also as China investigates Micron and its South Korean rivals over price fixing allegations, amid a surge in prices of dynamic random access memory (DRAM) chips.

The civil lawsuit filed by Micron against UMC and Jinhua in California is consistent with Micron's commitment to aggressively protect and enforce its trade secrets and intellectual property worldwide.

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Micron shares closed down 5.5 per cent at $51.48, while Nvidia finished 2 per cent lower.

"UMC is pleased with today's decision", Jason Wang, the company's co-president, said in a statement. "I think there is room for the stock to continue to go higher".

Micron makes big business from selling its products to China. Micron's shares dropped on Tuesday as a result but they have bounced back in Thursday's session after it came to light that this would have a minimal effect on its fourth-quarter revenues.

The Micron ban could be a major opportunity for other global chipmakers to step in.

The judgment issued on July 3rd not only banned the sales of some Micron-branded and Crucial-branded products in China, but also ordered Micron's IC assembly/testing plant in Xi'an to halt operation; Micron Technology (Shanghai) Co., Ltd. has also been ordered to cease sales. The Chinese court made a preliminary ruling on this.

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