China court bans Micron chip sales in patent case: Taiwan's UMC

China court bans Micron chip sales in patent case: Taiwan's UMC

China court bans Micron chip sales in patent case: Taiwan's UMC

Micron Technology (NASDAQ:MU) traded 3% higher on Thursday morning, bouncing back after China imposed an injunction on its chips earlier this week, which pushed shares lower.

Micron said that it hasn't been issued with an injunction from the Chinese court and would not be commenting further until it has received and reviewed the relevant documents. UMC is building a DRAM production plant in cooperation with JHICC, a state-owned enterprise under Fuzhou City of China.

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.

UMC shares got a boost from the Chinese court ruling soon after the market opened, and while their momentum was compromised to some extent by the lingering trade friction between the United States and China, the stock still stayed in positive territory. But the conflict boiled over on Friday when the administration enacted $34 billion of retaliatory tariffs on Chinese products, including electronic components like capacitors and diodes. "Near-term this could favor non-US chipmakers vs". The deal has been approved by regulators in eight other jurisdictions including the European Union and South Korea. China recently did not hide its will to hold Korean semiconductors in check while conducting an antitrust investigation of these largest DRAM producers.

According to Wang, Micron now supplies SSD modules to Alibaba, China's largest e-retailer; Huawei, the world's third-largest smartphone maker; Tencent Holdings, a Chinese conglomerate providing internet and telecommunications services; and Baidu, China's largest search engine. But ZTE still faces an uncertain future, and some members of Congress are seeking to keep the ban in place. The PHLX Semiconductor index fell 1.3% in afternoon trading, with Micron serving as one of the biggest drags to the overall index.

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But there are concerns about how Chinese companies are obtaining the technology needed to develop a homegrown semiconductor industry.

The dispute is part of a legal battle between UMC and Micron. "UMC invests heavily in its intellectual property and aggressively pursues any company that infringes UMC's patents".

UMC filed the lawsuit at the beginning of year, accusing Micron of violating its patents rights in mainland China.

Analysts believe the ban is largely symbolic as hurting the US chipmaker would end up creating more pain for local Chinese firms who would have to rely on Korean firms Samsung Electronics and SK Hynix, pushing up memory chip prices.

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