China Finds Way to Battle Chipmakers in U.S.

Taiwan’s United Microelectronics Corporations won its patent case brought against Micron Technology based in Idaho, in a court in China. The court in China ordered Micron chips to be halted from being imported or sold in the largest economy in Asia, said sources at the court.

On the news, Micron shares fell by up to 8%, while UMC shares jumped 3.9% in early trading Wednesday in Taipei.

This ordeal started when Micron sued the foundry based in Taiwan in December at a U.S. court, claiming trade secrets were stolen. That complaint was filed under a Racketeer Influenced and Corrupt Organization Act civil provision.

The U.S. case brought by Micron sprang out of a criminal indictment in August of 2017 in Taiwan brought against UMC as well as one of its partners Fujian Jinhua Integrated.

Prosecutors in Taiwan alleged that employees at UMC were part of a big plan to misappropriate Micron IP and deliver it through Jinhua to China.

In its civil complaint in December, Micron accused UMC of attempting to recruit high level personnel in Taiwan and entice former staff at Micron Taiwan to steal files which could help Jinhua, at the time little-known, to jumpstart China’s campaign of developing its own technology for chips.

A recent article published by the New York Times details a heist that includes being raided by police and a colleague stealing a phone from a factory while authorities were closing in.

Now, a court in China has ruled in favor of UMC and threatened to stop the import and sale of chips made by Micron.

Other semiconductor shares suffered as well on the news as the battle between Micron and China is considered a bellwether amidst a trade fight between Beijing and Washington, and China’s attempt to gain advanced chip tech and knowledge.

China represents about one quarter of the worldwide sales of memory chips, while half of the revenue generated by Micron is from sales in China, with an additional 12.5% from sales of chips in Taiwan.

Micron has also been looked at as a pawn in the escalating trade war pitting Washington against China. That was most notable in June when regulators in China began a probe into pricing of memory chips. In May, Micron had announced an outlook that was higher for the quarter and a buyback program of shares worth $10 billion.