UMC recieves favourable ruling in Chinese patent dispute

UMC recieves favourable ruling in Chinese patent dispute

Micron added the injunction will hurt its current fiscal fourth quarter revenue by "approximately" 1%, but the chipmaker continues to expect sales to be within the previously guided range of $8 billion to $8.4 billion U.S.

The Fuzhou Intermediate People's Court issued a preliminary sales injunction against Micron that prevents it from selling 26 semiconductor products, including DRAM and NAND flash memory chips, in China, contract chip manufacturer UMC said in a statement late on Tuesday.

The chipmaker said it would comply with the ruling, but would request the court to reconsider or stay its decision.

China's aim may not be to bar shipments of Micron's chips, instead the ruling may be part of a strategy to push it into a partnership with Chinese semiconductor makers, which could speed up the country's internal chip industry development, according to Stifel Nicolaus analyst Kevin Cassidy.

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.

Micron is now saying that they have not been served with a preliminary injunction in China on some of their chips as reported by Micron rival UMC.

A spokesman for Micron, which is based in Idaho, said Wednesday that the company hasn't yet received the court order and won't comment until it does.

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Investors took the news rather badly, with Micron's share price falling by 5.5 percent at the close of trading today.

UMC countersued in January, filing a patent infringement lawsuit against Micron in China, covering three areas, including specific memory applications and memory used in graphics cards. The Chinese government has poured billions of dollars into shifting the balance of power.

Beijing is holding up United States chipmaker Qualcomm's proposed $44 billion takeover of NXP Semiconductors.

China established Jinhua in February 2016 in a bid to make its own home-produced chips, with the firm investing 37 billion yuan that year to build a production line with technology support from UMC. UMC has not commented on the poaching allegations.

Analysts believe the ban is largely symbolic as hurting the USA 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.

Other chipmakers also gained. Other U.S. chipmakers were also weak, with Nvidia NVDA.O finishing 2 percent lower and Intel Corp INTC.O and Broadcom Inc AVGO.O closing down 1 percent each.

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