Micron’s China ban latest blow to chipmaking giants

Bloomberg

The decision by a Chinese court to temporarily ban some sales by Micron Technology Inc. adds to a series of setbacks for the world’s chipmaking giants in their most important market.
Micron, which has been caught up in dueling intellectual property lawsuits with United Microelectronics Corp., received a preliminary injunction from the Fuzhou Intermediate People’s Court in Fujian province stopping sales of 26 products.
The order includes dynamic random access memory and Nand flash memory chips, according to a statement from UMC.
Chipmakers are finding it increasingly fraught doing business in China, the world’s biggest market for semiconductors, amid tensions with the US over trade and the Asian country’s own aspirations in the sector. Micron and its South Korean rivals are being probed by antitrust authorities while regulators have been silent on their investigation of Qualcomm Inc.’s bid for NXP Semiconductors NV, a deal that has been pending for more than 18 months and cleared everywhere else in the world.
“As the trade war looms, both China and the US are trying to get more cards in their hands for sure. Companies like Micron are right in the middle of the storm,” said Roger Sheng, an analyst at Gartner Inc. “Having said that, I don’t think the local court got orders from Beijing to put the ban on Micron. That’s simply not how China’s government system works.”
Micron said it hasn’t been served with the injunction and won’t comment until it does. Shares in the Boise, Idaho-based company dropped as much as 8 percent while UMC was unchanged in Taipei.
Chipmakers led a slump in technology stocks in early European trade.
UMC declined to provide a copy of the court’s decision. An official who answered a call to the court’s news office confirmed the existence of an injunction order on Micron, but said details of the ban would not be made public because the case is still ongoing.
Hsinchu, Taiwan-based UMC took legal action against Micron in January, alleging that the US company infringed on patents in China related to memory storage and other products. 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 Micron ban escalates a trade dispute that’s engulfing industries from steel to autos and increasingly also the electronics sector, where the two countries’ economies are heavily intertwined.
China is the largest market for semiconductors, yet it isn’t home to even one of the top 10 producers of the crucial components.