Micron Stock (MU) Rebounds After China Ban, More Downside Likely

07 July, 2018, 04:03 | Author: Kathy Ellis
  • Micron Stock Drops On China Court Ruling To Ban Its Memory Chips

Shares of Micron and other USA 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 barred Micron Technology Inc (MU.O) from selling its main semiconductor products in the world's biggest memory chip market, citing violation of patents held by Taiwan's United Microelectronics Corp (UMC) (2303.TW). With the ruling, Micron's products now face injunction for violating UMC's patent rights in a court verdict that applies to all of mainland China. "Micron will not be commenting further until the company has received and reviewed documentation from the Fuzhou Intermediate People's Court of China".

The order undercuts the sale of DRAM modules and solid-state drives sold under Micron's Crucial and Ballistix brands. It predicted this will not affect its outlook for the August-ending fiscal Q4 of $8 billion to $8.4 billion.

After a day or two with few new trade-related developments, China's announcement that United States chipmaker Micron can no longer sell goods in the country has shaken investors. Jason Wang, co-president of UMC, stated, "UMC is pleased with today's decision". The affected products make up slightly more than 1% of Micron's annualized revenues.

Micron and UMC are also battling it out in Californian courts.

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In its filing Micron said UMC - which is scaling up its China business and plans to list it in Shanghai - had poached key Micron employees with the aim of helping Fujian Jinhua improve its own DRAM technology.

Micron confirmed on Thursday a court in China has granted a preliminary junction that bans its Chinese subsidiaries from manufacturing and selling some of its products in the Asian country.

Founded in 1980 as a spin-out from from the government-led Industrial Technology Research Institute (ITRI) and Taiwan's first semiconductor company, United Microelectronics Corporation (UMC) is no stranger to lawsuits alleging intellectual property infringement: The company was sued by Nintendo in the 90s for producing chips for counterfeit game cartridges, and settled in 1994. Qualcomm Inc rose 3.2 percent, Broadcom Inc 2 percent and Intel Corp up 2.6 percent. Micron shares fell 6.6% to $50.87 in recent trading, after touching an intraday low of $50.10. In 1Q18, Micron's NAND Flash revenue ranked the fourth worldwide with a market share of 12%, following 37% of Samsung, 19% of Toshiba and 15% of WDC.

"I think that China is using this case as a payback against the USA", said Ho in an interview with the Taiwan branch of New York-based broadcaster New Tang Dynasty Television.

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