Sales of Micron Chips Blocked in China Amid Trade Tensions with US

Sales of Micron Chips Blocked in China Amid Trade Tensions with US

USA flash memory chip maker Micron Technology Inc. saw its share price take a pummeling today on the news that a Chinese court has temporarily banned it from doing business in that country.

Micron confirmed on Thursday a court in China has granted a preliminary junction that bans its Chinese subsidiaries from manufacturing and selling some of its products in the Asian country.

Share slid 5.5% Wednesday after a Chinese court ruled in favor of United Microelectronics and Fujian Jinhua Integrated Circuit, which said Micron had infringed on patents in China.

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

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.

Micron said it had not been served with the injunction and would not comment until it was.

The two chipmakers have been at loggerheads since December a year ago when Micron filed a civil lawsuit in the state of California, accusing UMC of secret infringement of intellectual property related to its DRAM chips.

UMC announced that it has secured an injunction against the sale of certain Micron Technology products in China as part of a patent infringement suit.

The ban comes amid an escalating trade spat between Washington and Beijing that is spurring China to accelerate its goal of developing its own domestic chipmakers to curb the heavy reliance on USA firms like Micron and Qualcomm Inc (QCOM.O).

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The ZTE crisis has intensified China's desire to slash its dependence on foreign-made computer chips.

"It certainly appears semiconductors could move to the prime-time in negotiations between the Trump Administration and China", Evercore ISI analyst C.J. Muse said.

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

China represents about one quarter of the worldwide sales of memory chips, while half of the revenue generated by Micron is from sales in China, with an additional 12.5% from sales of chips in Taiwan.

Several Chinese government-backed entities have poured billions into research and for buying companies with a trove of chip patents. Jinhua has denied the allegations.

Shares in Micron dropped more than 5% in NY on Tuesday.

It also resells flash memory products purchased from other suppliers.

The competitors of Micron include Samsung Electronics Co., Ltd., Intel Corporation, SanDisk Corporation, Toshiba Corporation, and SK Hynix Inc.

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