A Chinese court has temporarily barred Micron Technology Inc (MU.O) from selling its main semiconductor products in the world's biggest memory chip market, citing violation of patents held by Taiwan's United Microelectronics Corp (UMC) (2303.TW).
In a patent ruling in favour of UMC, the Fuzhou Intermediate People's Court of the People's Republic of China issued a preliminary injunction stopping Micron from selling 26 products, including dynamic random access memory and Nand flash memory-related products, UMC said on Tuesday.
What just happened? U.S. semiconductor giant Micron has had sales of its chips temporarily banned in China by one of the country's courts.
A Chinese court has temporarily halted a US memory chip maker from selling its semiconductor products in China, a move that could further intensify the ongoing trade dispute between Beijing and Washington.
Micron is disappointed with the ruling by the Fuzhou Intermediate People's Court. Micron, the largest American maker of memory chips, recently confirmed that it was under investigation, sparking fears that it would become entangled in the mushrooming trade conflict between China and U.S.
Beijing has made the semiconductor sector a key priority under its "Made in China 2025" strategy, which has shifted up a gear after a US ban on sales to Chinese phone maker ZTE Corp (000063.SZ) underscored China's lack of domestic chips.
Back in December 2017, Micron filed a civil lawsuit in California, accusing UMC and its Chinese partner Fujian Jinhua Integrated Circuit of stealing design and manufacturing technologies related to its DRAM chips.
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UMC filed patent infringement lawsuits against Micron in China in January.
"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.
Several Chinese government-backed entities have poured billions into research and for buying companies with a trove of chip patents.
Beijing is holding up U.S. chipmaker Qualcomm's proposed $44 billion takeover of NXP Semiconductors. Jinhua has denied the allegations.
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.
Micron is the world's fourth-biggest semiconductor supplier by sales revenue following South Korean firms Samsung and SK Hynix and United States chip giant Intel.
Other chipmakers also gained. Micron added the injunction will hurt its current fiscal fourth quarter revenue by "approximately" 1 percent, but the chipmaker continues to expect sales to be within the previously guided range of $8 billion to $8.4 billion.