China cries foul: Country’s largest chipmaker YTMC sues Micron for patent infringement

In a development that can only be described as the pot calling the kettle black, Chinese chip manufacturer Yangtze Memory Technologies Co or YMTC has initiated legal proceedings against US rival Micron Technology, alleging the infringement of eight of its patents.

The lawsuit, filed on November 9, is currently under review at the US District Court for the Northern District of California and specifically targets Micron and its unit, Micron Consumer Products Group.

According to the legal documents, YMTC is accusing Micron of using YMTC’s patented technology as a defensive measure against competition from YMTC itself. The lawsuit claims that Micron failed to pay a fair share for the use of these patented inventions, accusing the US company of improper conduct in an effort to gain and safeguard its market share.

China has had a weird relationship with patents held internationally. Chinese companies, especially tech and auto companies have often been accused of blatantly copying designs and schematics of some of the most popular pieces of tech and cars. In fashion, China has often been accused of knocking off design of reputable designers and selling counterfeit products at a fraction of the cost. Even state-owned businesses have copied design and schematics from companies like Apple, BMW, Microsoft, Intel and countless others.

When these Chinese companies were sued by the copyright holders in China, to no ones surprise, the court sided with the Chinese companies, saying that internationally abiding patents had no value in China. Sometimes the courts would rule that there was no infringement at all.

As of now, there has been no official response from YMTC, and Micron has refrained from commenting outside of regular US business hours.

Micron Technology, a major player in the semiconductor industry, specializes in the production of DRAM chips and NAND flash memory chips. It competes with global counterparts such as South Korea’s Samsung Electronics, SK Hynix, and Japan’s Kioxia, a subsidiary of Toshiba.

In contrast, YMTC, a relatively smaller competitor, faced restrictions last year imposed by the US that prohibited it from acquiring certain American components.

The context of this legal dispute occurs against the backdrop of increasing US restrictions on exporting chipmaking technology to China, citing national security concerns. In May, China asserted that Micron products did not pass a network security review, leading to a ban on their purchase by operators of key infrastructure.

Micron has a history of entanglement in legal disputes in China, notably in 2018 when it was involved in a conflict with the state-backed chipmaker Fujian Jinhua. The latter was accused and denied allegations, of trade secret theft. Consequently, Micron’s main products faced a temporary sales ban in China that year.

Despite China once being Micron’s largest market, contributing half of its $20 billion revenue in fiscal 2017, the company has experienced a significant reduction in market share in recent years. In 2022, China accounted for only 16 per cent of Micron’s revenue, a notable decline attributed to the closure of its DRAM operations in Shanghai.

Micron, however, has expressed its ongoing commitment to the Chinese market. In June, the company announced a substantial investment of 4.3 billion yuan ($590 million) in the coming years for its chip-packaging plant in Xian city. Additionally, Micron made its debut at a trade expo in Shanghai earlier this month, signalling its continued engagement in the Chinese semiconductor landscape.

(With input from agencies)