Micron expects 1% revenue impact from China ban

Micron Technology said the ban on some chip sales imposed by a Chinese court in a patent infringement lawsuit would weaken its quarterly revenue by 1 percent.
Micron TechnologyMicron said it expects quarterly revenue to be within the previously guided range of $8 billion to $8.4 billion.

The US-based Micron Technology said it would appeal a decision that has added to U.S.-China trade tensions, Reuters reported.

Micron said the ruling by a Fuzhou Court in a lawsuit filed by rivals United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co temporarily bans it from selling some memory chips and solid state drives in China.

The chipmaker said it would comply with the court ruling and would request the court to 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’s general counsel.

The lawsuit followed Micron’s complaint in December against Chinese government-backed Fujian and UMC in a California court alleging misappropriation of its trade secrets and other misconduct.

China is trying to build its own semiconductor industry as part of its “Made in China 2025” strategy and as it seeks to lower its reliance on foreign companies, many of them U.S.-based.

The dispute follows a ban on U.S. firms supplying parts to China’s telecom equipment maker ZTE as well as the drawn-out wait for Chinese regulators to approve Qualcomm Inc’s $44 billion takeover of NXP Semiconductors.

Several Chinese government-backed companies started making investments into research and for buying companies with chip patents. Micron was the target of a failed takeover attempt by China’s Tsinghua Unigroup in 2015.

The Chinese ban on Micron targeted its products sold through retail outlets and represented a small portion of the chipmaker’s revenue.

Analysts believe the ban on the US chipmaker would end up creating pain for local Chinese firms who would have to rely on Korean firms Samsung Electronics and SK Hynix, pushing up memory chip prices.