Micron Says China Chip Ban to Have Minimal Effect on Revenue

Memory-chip giant Micron Technology Inc. said only a very small portion of its revenue comes from products whose sales have been halted by a court order in China, adding its view that the decision failed to consider its side of the patent dispute underlying the case.

Shares of Micron, the world’s third-largest maker of memory chips, rallied 2.6% in New York trading on Thursday as it released its first detailed statement on the dispute, gaining back some of the losses from a 5.5% decline the previous trading day after news of the court ruling first made headlines.

The order barring some Micron memory products from China came in a preliminary injunction from a court in East China’s Fujian province, in response to a patent infringement lawsuit bought this year by Taiwan chip giant United Microelectronics Corp., or UMC, and partner Fujian Jinhua Integrated Circuit Co. That pair took their action after Micron had previously sued UMC and Jianhua in a U.S. court for stealing trade secrets.

The Chinese ruling prevents Micron from selling 26 types of products in China, including DRAM chips and NAND flash memory chips, which allow digital devices to store and retrieve information. It also banned the company from importing more chips into China and ordered it to remove references to the banned chips from its website.

Micron said the products affected by the order account for just slightly more than 1% of the company’s total revenue, according to the statement. It added that since the order took effect in the middle of its current fiscal quarter, the impact to its revenue for the period will be less than 1%. It further reiterated its previous guidance that it expects to post revenue of $8 billion to $8.4 billion for its current fiscal quarter.

Micron further added that it will comply with the ruling while asking the Fuzhou Intermediate People’s Court to reconsider or stay its decision.

“Micron is disappointed with the ruling by the Fuzhou Intermediate People’s Court,” said Joel Poppen, senior vice president of legal affairs and general counsel at Micron. “We strongly believe that the patents are invalid and that Micron’s products do not infringe the patents. The Fuzhou court issued this preliminary ruling before allowing Micron an opportunity to present its defense.”

Poppen further criticized the Fuzhou court for rulings and other actions that “are inconsistent with providing a fair hearing through appropriate legal processes and procedures.”

The ruling marks a second setback for Micron in a key market for the company, accounting for over half of its $20 billion in sales last year. Last month the company confirmed visits to its offices by Chinese antitrust regulators as part of a probe targeting the pricing practices of major foreign chipmakers including both Micron and South Korean rival SK Hynix Inc.

Contact reporter Yang Ge (geyang@caixin.com)