Micron Technology might lose China as a customer very soon

As the DRAM market starts to buckle under the pressure of imminent investigations into allegations of price-fixing and collusion by SK-Hynix, Samsung, and Micron Technologies, Micron faced a double blow this week in a patent infringement case in China. Taiwan-based foundry company UMC took Micron Technology to court alleging patent infringement on a key component of memory chips made by Micron, and the Fuzhou Intermediate People’s Court issued a preliminary ban on all sales of Micron products to its customers in China, which covers 26 products found in DRAM and flash memory-based solid state drives.

While the ban is in place thanks to the ruling, Micron has stated to the press that they haven’t read the ruling in full, and won’t comment on it until they understand its contents. According to Bloomberg, 50% of Micron’s revenue in 2017 came from sales to China-based clients who incorporated their products into consumer electronics and PC components for the Chinese market. Micron’s stock price is currently down 5%, and if their biggest customer stops purchasing from them they’ll have a serious cash flow problem on their hands.

This follows an earlier spat between Micron and UMC in the same Fuzhou Intermediate People’s Court, where Micron alleged that UMC was stealing its designs and sharing the details with Fujian Jinhua Integrated Circuit Co., a mainland China-based semiconductor design company that specialises in memory chip design. One of China’s biggest projects recently has been to bankroll between 5-7 new foundries and companies capable of manufacturing more memory chips, giving China a local source for their memory needs instead of relying on products from third parties outside the country. The Chinese Government extended loans and additional funding to any company that could show their ability to build and run new foundries, and most of these are almost fully functional. If successful, China will be able to increase production and sell their memory chips to the rest of the world.

The case continues next week in the courts, where Micron is expected to appeal against the preliminary ban and try win their case in the patent lawsuit dispute.

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