Taiwan chip maker UMC claims court victory against United States rival Micron

Randal Sanchez
July 7, 2018

(UMC), the second largest contract chipmaker in Taiwan, moved higher after a Chinese court ruled in its favor in a patent case against USA -based rival Micron Micron Technology Inc.

"Micron has not been served with the preliminary injunction referred to in the statements issued by United Microelectronics Corp (UMC) and Fujian Jinhua Integrated Circuit Co".

(Jinhua). The patent infringement claims of UMC and Jinhua were filed against Micron in retaliation for criminal indictments filed by Taiwan authorities against UMC and three of its employees and a civil lawsuit filed by Micron against UMC and Jinhua in the United States District Court for the Northern District of California for the misappropriation of Micron trade secrets.

The ruling by the Fuzhou Court comes amid trade tensions between Washington and China over wide ranging issues including intellectual property.

What just happened? USA semiconductor giant Micron has had sales of its chips temporarily banned in China by one of the country's courts.

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.

Other semiconductor shares suffered as well on the news as the battle between Micron and China is considered a bellwether amidst a trade fight between Beijing and Washington, and China's attempt to gain advanced chip tech and knowledge.

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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 US firms like Micron and Qualcomm Inc (QCOM.O).

Last December, Micron filed a lawsuit against UMC in the Northern District Court of California of the U.S., claiming that UMC violated intellectual property rights by copying its memory patents and trade secrets. The court declined to comment on the case and said injunctions were not posted publicly.

Nevertheless, MU share are trading down -5.34% (down -$2.91).

China accounts for a quarter of the global memory chip market.

The ruling, which was disclosed by UMC and its state-backed Chinese partner, slammed shares of Idaho-based chipmaker Micron, which gets half of its revenue from China.

The competitors of Micron include Samsung Electronics Co., Ltd., Intel Corporation, SanDisk Corporation, Toshiba Corporation, and SK Hynix Inc. Because China cannot replace Micron's supply of chips with its own domestically produced chips, this could ultimately lead to a reversal of the court's ban, according to an unnamed official in South Korea's semiconductor industry, in an interview with South Korean news portal Business Korea.

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