Micron (MU) & Fujian Jinhua Reach IP Theft Lawsuit Settlement
Micron Technology MU recently settled a significant intellectual property theft lawsuit with Fujian Jinhua Integrated Circuit Company, a Chinese state-owned DRAM manufacturer, Bloomberg reported on Sunday, Dec 24.
This resolution follows complications stemming from the May 2023 Chinese government's restrictions on Micron's chip use in critical infrastructure due to cybersecurity concerns, impacting a substantial portion of sales connected to Chinese clients.
Efforts to mend relations included promises of investments in Chinese chip facilities and diplomatic visits amid legal battles initiated by Micron in 2017 against Fujian Jinhua and its partner, United Microelectronics Corporation, for alleged memory chip trade secret theft. While United Microelectronics has settled, tensions persist as the legal case against Fujian Jinhua continues amid heightened U.S.-China technological competition.
In November 2023, the company was accused of patent infringement by the Chinese chipmaker Yangtze Memory Technologies Company (“YMTC”). Partially state-owned, YMTC filed a lawsuit on Nov 9 at the U.S. District Court, alleging that the U.S. memory chipmaker has infringed eight of its patented technology, according to a report by Reuters.
The ongoing tech war between the United States and China could jeopardize Micron’s prospects, which are already facing the brunt of the weak demand for memory chips. Chip sales in China make up nearly 11% of Micron’s total revenues.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
Micron’s Growth Prospects
The latest settlement between Micron Technology and Fujian Jinhua is in sync with Micron's strategic efforts to navigate geopolitical challenges and mend ties with China amidst semiconductor trade tensions.
Simultaneously, Micron is capitalizing on the growing demand for AI applications at the edge by focusing on diverse end markets, such as data centers, PCs, mobile, auto, and industrial sectors. The company anticipates that the boom in artificial intelligence spending will drive the demand for its chips in the data center end market.
In line with this forward-looking approach, Micron Technology has recently introduced the Micron 3500 NVMe SSD. This innovative product utilizes advanced 232-layer NAND technology to enhance performance, catering to gaming, content creation, and client AI experiences.
Micron recently reported better-than-expected first-quarter fiscal 2024 performance and sequential growth across all key metrics. These indicates benefits of an improving supply-demand environment and signals that the industrywide sluggish period is nearing its end, and the company is moving back to profitability.
The expectation of supply normalization by mid-year 2024 is likely to drive pricing, while the boom in artificial intelligence spending is expected to fuel demand for its chips used in the data center end market. A rising mix of high-value solutions and improving customer engagement and cost structure are growth drivers as well. Also, 5G adoption in the IoT devices and wireless infrastructure is likely to spur demand for memory and storage.
For the second quarter of fiscal 2024, MU anticipates revenues of $5.3 billion (+/-$200 million). The Zacks Consensus Estimate for revenues is pegged at $5.31 billion, indicating 43.8% growth year over year.
Zacks Rank & Stocks to Consider
Currently, MU carries a Zacks Rank #3 (Hold).
MU’s shares have surged 73% year to date compared with the Zacks Computer & Technology sector’s rally of 52.3%.
Camtek CAMT, Ceridian HCM CDAY and Vertiv VRT are some other top-ranked stocks that investors can consider from the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAMT, CDAY and VRT shares have returned 212.5%, 4.4% and 257.1%, respectively, on a year-to-date basis.
Long-term earnings growth rates for Camtek, Ceridian HCM and Vertiv are pegged at 12.26%, 44.15% and 53.86%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Micron Technology, Inc. (MU) : Free Stock Analysis Report
Camtek Ltd. (CAMT) : Free Stock Analysis Report
Ceridian HCM (CDAY) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
