China Closes the Door on Micron

When there is war, there will always be casualties, and Micron Technology is the latest U.S. company to get caught in the middle of the United States' trade war with China.

Micron confirmed yesterday that a court in China has issued a preliminary junction that prevents the company's China subsidiaries from selling some of the chipmaker's products in the country. Chinese rivals United Microelectronics Corporation (UMC), which recently acquired Fujitsu's 300mm semiconductor fabrication plant, and Fujian Jinhua Integrated Circuit Co., Ltd. filed a lawsuit at the Fuzhou Intermediate People’s Court in Fujian province alleging that Micron had violated intellectual property rights. The ban seeks to prohibit Micron from selling 26 of its products, including Crucial and Ballistix-branded memory modules, solid-state drives, and memory chips used in graphics cards.

The Idaho-based chipmaker is convinced that UMC and Jinhua's lawsuit is nothing more than a revenge tactic to get back at Micron for the  criminal and civil lawsuit filed by the Taiwanese authorities and Micron against UMC and three of its employees for the misappropriation of Micron trade secrets.

When word of the Chinese-imposed ban hit the news yesterday, Micron's shares fell 5.5% but rebounded to 1.9% at $52.46 in the afternoon. The chipmaker claims that the ban only impacts approximately 1% of its revenue this quarter. The Idaho-based company remains optimistic and expects to achieve its previously projected revenue within the range of $8-$8.4 billion.

"Micron is disappointed with the ruling by the Fuzhou Intermediate People's Court. We strongly believe that the patents are invalid and that Micron's products do not infringe the patents. The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense," said Joel Poppen, senior vice president of legal affairs, general counsel and corporate secretary in a press release. "This ruling and other actions by the Fuzhou Court are inconsistent with providing a fair hearing through appropriate legal processes and procedures. Micron has a long-standing history of successful business operations in China, including a significant assembly and test manufacturing facility in Xi'an, as well as deep relationships with many valued China customers. Micron will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners."