Micron Technology Inc said on Thursday a temporary Chinese ban on a patent infringement lawsuit against the US chipmaker would hurt its fourth-quarter revenue by just 1 percent, stemming concerns of a bigger impact.
UMC took legal action against Micron in January, alleging that the U.S. company infringed on patents in China related to memory storage and other products.
China's aim may not be to bar shipments of Micron's chips, instead the ruling may be part of a strategy to push it into a partnership with Chinese semiconductor makers, which could speed up the country's internal chip industry development, according to Stifel Nicolaus analyst Kevin Cassidy.
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Analysts believe the ban is largely symbolic as hurting the USA chipmaker would end up creating more pain for local Chinese firms who would have to rely on Korean firms Samsung Electronics and SK Hynix, pushing up memory chip prices.
Founded in 1980 as a spin-out from from the government-led Industrial Technology Research Institute (ITRI) and Taiwan's first semiconductor company, United Microelectronics Corporation (UMC) is no stranger to lawsuits alleging intellectual property infringement: The company was sued by Nintendo in the 90s for producing chips for counterfeit game cartridges, and settled in 1994. The preliminary injunction from the Fuzhou Intermediate People's Court prohibits Micron from selling in China 26 DRAM and NAND-related items, including certain solid-state hard drives and memory sticks.
UMC, a contract chip manufacturer, plans to list its China operations on the Shanghai Stock Exchange. Joel Poppen, Micron's general counsel, added that it "will continue to aggressively defend against these unfounded patent infringement claims while continuing to work closely with its customers and partners".
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USA analysts who have been recommending Micron's stock as it racks up record profits amid one of the strongest periods of demand in the memory chip industry's 50-year history, expressed relief at Micron's analysis.
In the semiconductor industry, experts say that China pursuing the rapid growth of the Chinese semiconductor industry sided with the Chinese company. "This is an opportunity for SK Hynix and Samsung, because the banned products are not what the Chinese can make on their own".
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As of 11:42 a.m., shares of UMC had gained 0.56 percent to NT$18.05 (US$0.58), with 81.87 million shares changing hands, outperforming the broader market index, which was down 0.12 percent at 10,702.91. "So they have to import anyway", Greg Roh, an analyst at Hyundai Motor Securities, told Reuters in an interview. Micron shares closed down 5.5% the day before the Fourth of July holiday.