Temporary sales ban in China
The semiconductors industry is cautious amid rising trade tensions between the US and China. Taiwan’s UMC (United Microelectronic Corporation) and China’s (MCHI) Fujian Jinhua Integrated Circuit released a statement on July 3. The statement said that the Fuzhou Intermediate People’s Court of the People’s Republic of China temporarily banned some Micron Technology (MU) chips in China. The products in question are 26 DRAM (dynamic random access memory) and NAND (negative) products.
Micron said that it didn’t receive the document. The company said that it won’t comment until it receives and reviews the court document.
According to a Bloomberg report, UMC refused to provide a copy of the court’s order. However, the court’s news office confirmed the existence of an injunction order on Micron.
US stocks react
The above news escalated the trade dispute between the US and China. Stocks with exposure to the memory market and China reacted aggressively. On July 3, Micron and Intel (INTC) stock fell 5.5% and 1.45%, while Applied Materials (AMAT) and KLA-Tencor (KLAC) stock fell 1.93% and 2.2%. The PHLX Semiconductor Sector (SOXX) fell 1.82%.
The current scenario presents a good “buy” opportunity for investors. Micron has a strong demand environment and the ban is temporary.
Legal disputes between Micron and UMC
Micron and UMC have been engaged in legal battles for the past few months. Micron filed a patent infringement lawsuit against UMC in the United States in December 2017. UMC filed a patent lawsuit against Micron in China in January. The lawsuit asked the court to ban Micron from manufacturing and selling the products in question and destroy existing inventory. Fujian Jinhua filed similar complaints against Micron in April.
Next, we will see what the temporary injunction means for Micron and the US.
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