Micron has adopted a compromise strategy this time!

According to the latest news from Bloomberg, Micron Technology said that it has reached a global settlement agreement with Fujian Jinhua Integrated Circuit Co. A Micron spokesperson said in an email that "the two companies will dismiss the complaints against each other globally and end all litigation between the parties," but declined to give further information and details.

In 2017, Micron sued Fujian Jinhua and its Taiwanese partner United Microelectronics in the United States, accusing the two companies of stealing trade secrets about its memory chips. Since then, the US Department of Commerce has added Fujian Jinhua to the entity list of the Export Administration Regulations, however, the US Department of Justice's treatment of Fujian Jinhua is pending.

This statement of Micron may be a great benefit for Fujian Jinhua, and it may also be a good opportunity for the development of memory chips. It is worth mentioning that the memory chip industry is in a recovery trend, and related investment opportunities may also be brewing.

Micron suddenly came out swinging

Micron Technology said it had reached a global settlement agreement with Fujian Jinhua Integrated Circuit Co. A Micron spokesperson said in an email that "the two companies will dismiss the complaints against each other globally and end all litigation between the parties," but declined to give further information and details. Fujian Jinhua did not immediately respond to an email seeking comment outside office hours.

A few months ago, China banned Micron chips from "critical infrastructure" because of cybersecurity concerns. The United States has also been working with Allies to block China's access to the most advanced semiconductors and the latest chip manufacturing technology.

Micron warned in June that about half of its sales related to customers based in China could be affected, representing a "low double-digit percentage" of its global revenue.

Micron appeared to try to smooth things over, pledging in the middle of this year to invest an additional 4.3 billion yuan ($602 million) to build its Chinese chip packaging plant in Xi 'an. In November, Micron President and CEO Sanjay Mehrotra visited China's Minister of Commerce Wang Wentao in Beijing. During the meeting, which took place at the Ministry of Commerce, the two sides discussed Micron's business development in China, as well as the previously announced capital increase for operations at the Xi 'an plant. Micron has also opened up STEM education and development opportunities for disadvantaged children in China and donated money to flood-hit areas in China.

Origin of the case

In 2017, Micron sued Fujian Jinhua and its Taiwanese partner United Microelectronics in the United States, accusing the two companies of stealing trade secrets about its memory chips. On October 30, 2018, the US Department of Commerce added Fujian Jinhua Integrated Circuit Co., Ltd. to the entity list of the Export Administration Regulations on the grounds of threatening the national security of the United States, prohibiting US companies from selling software, technology and products to it.

Umc also announced its decision to suspend technology development for Jinhua. In a settlement with Micron, U.S. prosecutors agreed to drop serious charges of economic espionage and conspiracy to steal intellectual property. However, the Justice Department's case against Fujian Jinhua is still pending.

This has seriously affected the development of Fujian Jinhua. According to the plan, Fujian Jinhua manufacturing technology work is mainly carried out by UMC, the first phase of the overall Jinhua project, a total of 5.3 billion US dollars, and will be officially put into production in the third quarter of 2018, when the introduction of 32-nanometer process of 12-inch wafers monthly capacity, is expected to reach 60,000 pieces of scale. The company aims to eventually launch 20-nanometer products, and plans to build four phases with a monthly production capacity of 240,000 pieces by 2025. However, the actions of Micron and the US Department of Commerce undoubtedly hindered the development of Fujian Jinhua and the entire memory chip.

The industry is enjoying a recovery

Not long ago, under the premise of memory and hard disk prices, Micron CEO Merota believes that the surge in demand for memory and hard disk in data centers is stronger than consumer PCS and smartphones, which can offset the slow growth of the latter market. 2024 will be the year the storage industry rebounds, and 2025 could be the year Micron sets a new record.

On December 21, 2023, Micron Technology disclosed results for its fiscal first quarter ended November 30. According to the results, Micron Technology's revenue in the first quarter of fiscal year 2024 was $4.73 billion, and analysts expected $4.54 billion; $4.01 billion in the previous quarter, up 18% sequentially; It was $4.09 billion in the same period last year, up 16% from a year earlier.

After the data was released, Micron Technology surged for two consecutive trading days, rising nearly 10% as a whole, and approaching a record high.

Looking ahead to 2024, the World Semiconductor Trade Statistics Organization (WSTS) said the global semiconductor market is expected to reach $588.3 billion, up from a forecast of $576 billion this spring, with the expansion expected to be driven mainly by storage, which covers applications such as PCS, servers and smartphones. It is expected to recover to $120 billion by 2024, an increase of more than 40% compared to the previous year; Nearly all key categories, including discrete devices, sensors, analog chips, logic chips, and MCUS, are expected to show single-digit growth.

Citi said that it is optimistic about the overall recovery trend of the chip industry and listed Micron as a preferred stock in the chip industry. Citi raised its price target on Micron to $88 from $85 and maintained a "buy" rating. Wall Street analysts have a "buy" consensus rating on Micron, with an average price target of $85.94, representing a potential upside of 9% over the next 12 months, according to data compiled by Seeking Alpha.

According to Taiwan Electronic Times previously reported that due to the continuous fermentation of storage price expectations, downstream system manufacturers are becoming more active in purchasing power, and some products are out of stock. After the upstream storage original factory reduced production, the overall supply resource order was dynamically adjusted, giving priority to the supply of their own brand products, and the proportion of external NAND sales declined. According to the supply chain, some products are currently out of stock, and after customers finalize the first wave of reservations, they want to increase their shipments but can not buy them. There are also sealed test manufacturers pointed out that since the third quarter, storage module manufacturers urgent orders have emerged, as the industry prices continue to rise, the fourth quarter closed test demand will be stable or slightly increased, the overall order momentum or will be better than the third quarter.