UMC secures injunction against Micron chips in China

UMC secures injunction against Micron chips in China

UMC secures injunction against Micron chips in China

Micron Technology has been temporarily barred from selling its memory components in China, following a patent dispute with Taiwanese rival United Microelectronics Corporation (UMC). 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 regulators are concerned with high prices or memory products, and we now have some clarity on what that means for Micron.

Among the remedies it sought was to stop Micron from making, importing or selling the allegedly infringing products and also destroy all inventory and pay compensation. The court declined to comment on the case and said injunctions were not posted publicly. 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.

The dispute follows a ban on US 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.

Analysts said the ruling would bolster Micron's well-established rivals. Local media has reported that authorities are looking into increases in chip prices.

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Micron alleges that UMC agreed to develop DRAM technologies for Jinhua, but without any advanced DRAM processes in house, UMC recruited Micron employees in Taiwan to get hold of Micron's DRAM-related trade secrets.

China accounted for more than 50% of Micron's revenue in financial 2017, according to company data.

China is the largest market that accounts for 65% of world semiconductor trade.

The injunction also comes amid escalating trade tensions between the United States and China over tariffs.

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China's Huawei Technologies and ZTE are fighting United States government action that threatens to cut them off from U.S. suppliers and potential customers.

Earlier this week, U.S. authorities blocked a seven-year application from China Mobile to enter the domestic market, citing national security concerns. The company - which only two years ago was losing money, eliminating jobs and weighing an acquisition offer from China's Tsinghua Unigroup - almost doubled its year-over-year profit last quarter, to $3.82 billion.

Beijing has made the semiconductor sector a key priority under its "Made in China 2025" strategy, which has shifted up a gear after a US ban on sales to Chinese phone maker ZTE Corp (000063.SZ) underscored China's lack of domestic chips.

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