Micron Plans to Appeal China Ruling

Micron Technology plans to appeal a preliminary injunction handed down last week by a Chinese court preventing its Chinese subsidiaries from manufacturing, selling or importing some DRAM modules and solid state drives (SSDs).

The ruling, issued last week by the Fuzhou Intermediate People's Court in China's Fujian Province in response to a patent infringement suit filed by Taiwanese foundry UMC, forced Micron to halt sales of Crucial and Ballistix-branded DRAM modules and SSDs and cease operations at its test and assembly facility in China's Xi'an high-tech zone.

Micron maintains that its products do not infringe on the UMC patents. The company maintains that the patent infringement claims were filed by UMC and its Chinese subsidiary, Fujian Jinhua Integrated Circuit Co., in retaliation for accusations by Micron that UMC misappropriated Micron trade secrets, which resulted in a civil lawsuit filed by Micron in U.S. District Court and criminal indictments against UMC and three of its employees brought by Taiwanese authorities.

Micron said it would comply with the ruling while requesting that the Fuzhou Court reconsider or stay its decision.  

"The Fuzhou Court issued this preliminary ruling before allowing Micron an opportunity to present its defense," said Joel Poppen, Micron senior vice president and general counsel, in a statement. "This ruling and other actions by the Fuzhou Court are inconsistent with providing a fair hearing through appropriate legal processes and procedures."

Micron said it expects the injunction to reduce its sales for the current quarter by about 1 percent. The company said it still expects sales to between $8 billion and $8.4 billion, the guidance range the company has given previously.   

According to DRAMeXchange, a research firm that tracks memory pricing, the ruling will significantly impact Micron's sales in China and also impact the businesses of Micron's downstream partners. DRAMeXchange estimates that China is expected to consume about 26 percent of Micron's DRAM bit output in 2018 and about 20 percent of Micron's NAND bit output.

Estimates of China's consumption of Micron's DRAM and NAND bits for 2018.Source: DRAMeXchange