The Fuzhou Intermediate People's Court issued a preliminary sales injunction against Micron that prevents it from selling the chips, including DRAM chips and NAND flash memory chips, in China, UMC said in a statement late on Tuesday.
Since the fourth fiscal quarter is underway, Micron anticipates that the negative impact to revenue this quarter relating to the injunction will be roughly 1%, and the company continues to expect revenue to be within the previously guided range of $8.0 billion to $8.4 billion. Shares in the Boise, Idaho-based company dropped as much as 8%.
The firm's estimate that the ban imposed by a Chinese court in a patent infringement lawsuit would weaken quarterly revenue by just 1 percent drove its shares as much as 3.6 percent higher and lifted stocks of other US chipmakers.
To counter the lawsuit, UMC sued Micron in China in January 2018, accusing the American company of stealing its patents registered in China.
UMC declined to provide a copy of the court's decision. "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".
Shares of UMC rose as much as 3.9% in Taipei while Micron slumped 5.5% in NY. Micron, naturally, disagrees with UMC's claims, and in an interesting twist has issued a statement of its own claiming to have not yet been served with any such injunction.
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A Chinese antitrust regulator is already investigating Micron and its Korean rivals, the companies have said.
Authorities within the Xi Jinping regime have repeatedly raised concerns over the increasing prices of memory chips in the country.
China is the world's largest semiconductor market, but isn't home to even one of the top 10 producers worldwide. They have generated record profits recently from the components that are essential to everything from supercomputers to smartphones.
UMC shares got a boost from the Chinese court ruling soon after the market opened, and while their momentum was compromised to some extent by the lingering trade friction between the United States and China, the stock still stayed in positive territory.
"It certainly appears semiconductors could move to the prime time in negotiations between the Trump administration and China", Evercore ISI analyst C.J. Muse said. That deal was scheduled to be closed at the end of past year and has been approved everywhere else in the world.