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Micron shares plummet after China bans chip sales

07 July, 2018, 04:03 | Author: Lawrence Cooper
  • Micron temporarily banned in China

Micron, according to reports, has not been served with the injunction. On July 3, 2018, Fuzhou Intermediate People's Court of China issued a preliminary injunction against Micron, enjoining Micron from selling related items in China. UMC has not commented on the poaching allegations.

The Micron ban escalates a trade dispute between China and the U.S. that's engulfing industries from steel to autos and increasingly also the electronics sector, where the two countries' economies are heavily intertwined.

UMC co-president Jason Wang, commented, "UMC is pleased with today's decision".

The U.S. firm filed a civil lawsuit in December in California, accusing UMC and Chinese partner Fujian Jinhua Integrated Circuit Co of stealing design and manufacturing technologies related to its DRAM chips. The regulators are concerned with high prices or memory products, and we now have some clarity on what that means for Micron.

"UMC's move to deepen ties with China and the eagerness to join the Chinese chip ecosystem could definitely help it leverage more resources and gain business interests from the nation when many emerging Chinese chip providers still need technical support from Taiwan", said Liu.

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Shares of Micron Technology are rallying Thursday, up 1.32%, after the company said the impact from a sales ban in China won't have be a huge negative on its business. "I think there is room for the stock to continue to go higher".

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.

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.

Other chipmakers also gained. If the ban is enacted, Micron's competitors, including Samsung, SK Hynix, WDC, Intel, Toshiba and the new entrant YMTC would be benefited. "So they have to import anyway", said Greg Roh, an analyst at Hyundai Motor Securities. "In the end, the Chinese court is expected to withdraw the preliminary ruling, but if Chinese chipmakers have technological power that can match that of Korean chipmakers several years from now, there will be a stronger pressure or sanction on Korean companies". The country is the world's largest market for chips but China's homegrown suppliers are dwarfed by American rivals.

In the semiconductor industry, experts say that China pursuing the rapid growth of the Chinese semiconductor industry sided with the Chinese company.

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