Monday, 24 September, 2018

Micron shares plummet after China bans chip sales

Semiconductors are among China's biggest imports rivalling oil Semiconductors are among China's biggest imports rivalling oil More
Elsie Buchanan | 07 July, 2018, 03:59

A Chinese court has temporarily barred Micron Technology from selling 26 chip products in the mainland in a ruling over a patent infringement case with Taiwan's United Microelectronics (UMC), UMC said. "Micron will not be commenting further until the company has received and reviewed documentation from the Fuzhou Intermediate People's Court of China".

To counter the lawsuit, UMC sued Micron in China in January 2018, accusing the American company of stealing its patents registered in China.

The court in China ordered Micron chips to be halted from being imported or sold in the largest economy in Asia, said sources at the court.

The dispute follows a ban on USA firms supplying parts to China's telecom equipment maker ZTE as well as the drawn-out wait for Chinese regulators to approve Qualcomm Inc's $44 billion takeover of NXP Semiconductors.

Shares of Micron Technology are rallying Thursday, up 1.32%, after the company said the impact from a sales ban in China won't have be a huge negative on its business.

China is also investigating 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.

China: US tariffs will hit intl. supply chains
The motorcycle company announced last month it would move production out of the U.S.to get around the EU's retaliatory tariffs . The president said USA tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.


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. UMC's case included requests that Micron stop making, importing, or selling these products.

Micron said it expects quarterly revenue to be within the previously guided range of $8.0 billion to $8.4 billion.

"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. 'UMC is pleased with today's decision, ' crows Jason Wang, co-president of UMC.

US analysts who have been recommending Micron's stock as it racks up record profits amid one of the strongest periods of demand in the memory chip industry's 50-year history, expressed relief at Micron's analysis.

European shares are broadly higher Wednesday, but they are losing some ground as trade tensions continue to simmer.

Other chipmakers also gained. The ban applies to its subsidiaries Micron Semiconductor (Xi'an) Co Ltd and Micron Semiconductor (Shanghai) Co Ltd.

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