Micron Rallies as It Says Injunction in China Won't Affect Its Quarter

U.S. Stock Market

Micron Technology Inc said on Thursday a temporary Chinese ban on a patent infringement lawsuit against the USA chipmaker would hurt its fourth-quarter revenue by just 1 percent, stemming concerns of a bigger impact.

"Micron has not been served with the preliminary injunction referred to in the statements issued by United Microelectronics Corporation and Fujian Jinhua Integrated Circuit Co. dated July 3", it said in a statement. The company said on Thursday that it expects to lose only one percent of its revenue because of the order, which was handed down by Fuzhou Intermediate People's Court in Fujian Province. The regulators are concerned with high prices or memory products, and we now have some clarity on what that means for Micron.

MU, -1.24% shares fell Tuesday following a report that a Chinese court blocked the sale of memory products from the chipmaker in China.

The case is part of a broader dispute between the two companies centring on accusations that UMC acted as a conduit for the theft of Micron's designs in an attempt to help China grow its domestic chip industry and replace imports that rival oil in total value.

However, today Micron reiterated its quarterly sales guidance, emphasizing that the injunction would only impact its overall sales by 1%. Moreover, Micron has submitted compelling evidence to the Patent Review Board of China's State Intellectual Property Office demonstrating that the patents are invalid because they are directed to technologies that were previously developed and patented in other countries by other technology companies. Micron will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners.

As China accounted for about 50 percent of Micron's revenue in 2017, the ruling sent Micron shares plunging by 5.5 percent on Wall Street overnight.

According to UMC, the ruling on Tuesday by the Chinese court showed it has initially judged Micron to have stolen technology from the Taiwanese company.

China is the largest importer of memory products, consuming 20 percent of the world's DRAM, as it has yet to build up its nascent chip industry.

As of 11:42 a.m., shares of UMC had gained 0.56 percent to NT$18.05 (US$0.58), with 81.87 million shares changing hands, outperforming the broader market index, which was down 0.12 percent at 10,702.91.

It also resells flash memory products purchased from other suppliers. The ban applies to its subsidiaries Micron Semiconductor (Xi'an) Co Ltd and Micron Semiconductor (Shanghai) Co Ltd.

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