In a recent legal development, Chinese flash memory manufacturer Yangtze Memory Technologies Co (YMTC) has taken legal action against U.S. chip giant Micron Technology, alleging the infringement of eight patents. The lawsuit, filed on November 9th at the U.S. District Court for the Northern District of California, accuses Micron and its subsidiary of utilizing YMTC’s patented technology to gain and protect market share without fair compensation.
Micron, a key player in the production of DRAM and NAND flash memory chips, competes globally with industry leaders such as Samsung, SK Hynix, and Kioxia (Toshiba’s unit). The lawsuit comes amid increasing restrictions on exporting chipmaking technology to China by the U.S. government, citing security concerns.
YMTC contends that Micron engaged in “freeriding” practices, hindering fair competition and impeding YMTC’s progress. The legal action comes in the wake of escalating U.S. sanctions on the export of advanced semiconductor tools and services to China, affecting YMTC’s ability to acquire certain American components.
Despite being blacklisted by the U.S. in December and facing a cybersecurity review by Beijing in April, YMTC has persevered. The company has adapted by forging closer ties with domestic suppliers like Naura, aiming to replace U.S. components in its manufacturing process. This resilience is notable, considering that companies like Lam Research and KLA Corp withdrew staff from YMTC after it was added to the U.S. Entity List.
YMTC’s technological prowess is emphasized in the lawsuit, where the company claims to have manufactured the “world’s most advanced” 3D NAND memory chip in a consumer device. Referring to itself as a “key player in the global 3D NAND market,” YMTC positions the lawsuit as a measure to protect its intellectual property against Micron’s alleged attempts to hinder its progress.
The market dynamics reveal YMTC’s role as China’s response to global NAND memory chip makers. The company unveiled its first 232-layer 3D NAND chip in August last year, showcasing its commitment to innovation. The U.S. trade restrictions have prompted Chinese businesses, including YMTC, to strengthen ties within the semiconductor supply chain, reducing reliance on American technologies.
Financially, YMTC received a significant boost in March with a $7 billion capital injection from state-backed investors, including the “Big Fund.” This injection aimed to enable YMTC to continue producing NAND memory chips without dependence on American suppliers, showcasing the strategic support from the Chinese government.
As for market share projections, YMTC’s global share in the NAND sector is anticipated to decline to 5.7% this year from 6% in 2022. Similarly, Micron’s share is forecasted to decrease to 10.9% from 11.3%, reflecting the challenges both companies face amid geopolitical tensions and evolving market dynamics.
Micron declined to comment on the pending litigation, but the legal battle between YMTC and Micron adds a new chapter to the ongoing semiconductor industry saga, marked by global competition, technological advancements, and geopolitical challenges.
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