Landmark Reconciliation between Chinese and American Semiconductor Giants

On the 24th, Bloomberg reported, citing an email from a spokesperson for the US semiconductor giant Micron Technology, that the company has reached a global settlement agreement with Fujian Jinhua Integrated Circuit Co., Ltd. Bloomberg stated that Micron Technology derives approximately 25% of its global total revenue from the Chinese market. Since the beginning of this year, Micron Technology has started repairing its relations with China. In June, Micron Technology announced an increased investment in China, planning to invest over 4.3 billion Chinese yuan in its factory located in Xi’an in the next few years. In November, Micron Technology’s CEO, Sanjay Mehrotra, visited China, and during his meeting with Minister of Commerce Wang Wentao, he expressed the company’s continued willingness to expand investments in China. (Global Times) Major Reconciliation Between US and Chinese Semiconductor Giants!

I’ve been following the case involving Micron, Jinhua, and United Microelectronics Corporation (UMC), specifically the intellectual property dispute among them.

In essence, it’s highly probable that three former employees of Micron stole confidential information and took it to UMC in Taiwan, but there is no evidence proving any connection with Jinhua.

The situation is straightforward

The background story of this news is as follows:

In 2016, the Fujian government took the lead in introducing a semiconductor manufacturing plant from Taiwan. It was a joint venture between Fujian Jinhua and Taiwan’s United Microelectronics Corporation (UMC), with an investment of $3 billion. It was expected to start production in the second half of 2018.

In May 2018, the factory construction began, and it started production.

In October 2018, the United States issued a semiconductor sanction list, and this factory was included in the entity list.

The supply of raw materials and equipment for the new factory was completely interrupted. Hundreds of Taiwanese experts and engineers returned to Taiwan.

This factory was doomed.

The upfront investment of tens of billions of dollars went down the drain. Most of the $3 billion investment came from the mainland.

Meanwhile, Micron Technology (Micron) pushed the U.S. Congress and the courts to launch global civil and criminal lawsuits against Jinhua, accusing them of stealing Micron’s technology at the Quanzhou factory. They demanded nearly $20 billion in compensation and issued global warrants for Jinhua’s key technical staff and company executives. (At the same time, Micron also initiated legal proceedings against UMC.)

In response to these allegations, Jinhua stated: “We are responsible for hardware. The technology was provided by Taiwan’s UMC. UMC has already paid patent fees to Micron. If Micron has any objections to UMC’s use of patents, they should take it up with UMC.”

The situation went back and forth for nearly four years, and the two parties eventually settled.

This is the background story of this news, but the story is not over.

Another key player in this story is Taiwan’s United Microelectronics Corporation (UMC).

Last week, UMC entered into a partnership with Intel. UMC sold its 12-nanometer manufacturing technology to Intel to support Intel’s new chip factory in the United States, along with some other cooperation agreements.

Intel paid UMC more than $10 billion in total.

UMC’s Chairman, Simon Cao Xingcheng, was once seen as a “patriotic businessman” who advocated for peaceful reunification and proposed intermittent referendums on reunification in Taiwan. He even sent his successor, Stephen Chen, to the mainland to oversee the establishment and operation of chip factories.

This led to legal proceedings by the Chen Shui-bian administration in Taiwan, citing violations of cross-strait relations regulations. However, Simon Cao Xingcheng remained unfazed and continued to push forward with his “Mainland Chip Plan.”

The turning point came in 2019 when the mainland established the Science and Technology Innovation Board (STAR Market) with the first batch of 25 companies to be listed. Originally, it was 26 companies, but one company, Suzhou Changjian Technology Group, announced a halt to its listing 12 hours before trading began.

The reason behind this was that the mainland discovered issues related to Micron, UMC, and Jinhua patents concerning Changjian’s equity.

They were caught in the middle of a U.S.-China standoff.

The mainland said: “UMC and Changjian, resolve your equity and patent issues before relisting. Don’t let the U.S. interfere again.”

As a result, in 2018, the failure of Fujian Jinhua’s factory and the failure of Suzhou Changjian’s listing in 2019 dealt consecutive blows.

In 2020, Simon Cao Xingcheng made a complete turnaround and strongly opposed the mainland.

A few final words:

  1. In 2018, 48% of global FDI in the chip industry flowed into China, but by 2022, it was only 1%. The U.S. went from 0% in 2018 to 37% in 2022. India, Singapore, and Malaysia went from 10% to 38%.

  2. The chip ban has been in effect for 5 years, and the impact is still significant. A combination of carrots and sticks has led to a global hunt.

  3. We must strengthen ourselves. It’s a must. The disruption brought by Huawei and MediaTek in the industry is a strategic milestone in this battle. Without disruption, there can be no reconciliation.

  4. Let’s cheer on the frontline warriors. “Even though there are complaints and the overall environment is tough, I can’t control others, but I must strive to make a difference.” Let’s cheer on the frontline warriors.

Looking forward to good news.

Go for it.

Go for it.

“Choke to death if held, brag if released.”

Astronomers declare 2023 as the Year of the Boomerang, with the production of boomerangs doubling.

Semiconductors are the core battleground of the new Cold War between China and the United States. The actions of relevant companies also carry significant implications. This can be seen as a microcosm of the phase-wise relaxation of Sino-US relations in the core battlefield.

However, the positioning of the semiconductor field as a core area with ‘small courtyards and high walls’ will not change. Various export controls, technological blockades, and decoupling efforts will remain long-term trends.

This long-term trend itself will further imbalance Sino-US trade (supply and demand on both sides). If the United States prevents China from buying what it truly wants, reducing the trade deficit (from the U.S. perspective) can only be achieved through industrial chain transfer, the so-called ‘decoupling.’ This is the vicious cycle of the economic warfare in the new Cold War.

Reflected in the macroeconomic aspect, on the surface, China and the United States face completely opposite economic problems. The United States is grappling with high inflation (although it has temporarily eased, it still faces significant pressure compared to the average inflation target of 2% in recent years), while China faces the risk of deflation. However, in reality, the problems faced by both countries are two sides of the same coin, and the core reason for the current economic predicaments of both countries is, to a certain extent, the same.

“At the root, ‘rising prices’ is a supply and demand problem. Prices rise when demand exceeds supply. If there are issues with the industrial and supply chains, and the supply side is affected, even if there is ‘tightening,’ it may not necessarily curb inflation – this is the problem currently faced by the West, which is simultaneously at odds with the world’s largest industrial nation and the top three resource-rich nations, leading to ‘decoupling’ and severely affecting its supply side.

Conversely, if ‘supply exceeds demand,’ there is no basis for price increases. Currently, China is facing an obvious problem of shrinking demand, both external and internal. Externally, it is the ‘decoupling’ in the new Cold War, which leads to inflation in the West but deflation in China. Internally, it is the seriously damaged balance sheets of the past few years, which simultaneously affect new job creation, income growth, and the willingness of ‘old money’ to engage in ‘credit expansion.’

From a historical and realistic perspective, the most ideal and efficient win-win solution for both China and the United States to fundamentally overcome their current economic predicaments is still to return to the G2 framework of the past, the so-called ‘China-US Couple’s Theory,’ empowering each other on the demand and supply sides. However, under the prevailing atmosphere of the new Cold War, especially the U.S.’s unilateral ‘decoupling’ path, that ‘beautiful old times’ may remain permanently in the past.

Looking ahead, it is highly likely that China and the United States will only experience phase-wise relaxation, rather than affecting the gradually drifting tone (in the foreseeable future). China will strengthen its domestic circulation and develop the ‘Belt and Road’ market to reduce reliance on European and American markets, while the United States will restructure its supply chain with various exclusive clauses tailored for China.

‘Divorce’ is inevitable, of course, with associated costs, and the two major economies of China and the United States will continue to bear the cost of ‘divorce’ – the disruption and pain of separating supply and demand, and the reconstruction.

And the ‘small courtyards and high walls’ style of technology export control is likely to become increasingly strict.

Please note that on May 21st this year, in the conclusion of the cybersecurity review conducted by the Office of Cybersecurity Review on Micron’s products sold in China, Micron’s products sold in China did not pass the cybersecurity review :

According to laws and regulations such as the “Cybersecurity Law,” operators of key information infrastructure within China should cease purchasing Micron’s products. This is the first case explicitly stating “did not pass” in the cybersecurity review since the implementation of laws and regulations such as the “Cybersecurity Law.”

In fact, this war has been ongoing for quite some time.

In February 2016 , Fujian Jinhua was established, and in May, it signed a technical cooperation agreement with Taiwan’s Lianhua Electronics to develop DRAM-related process technology.

On July 16, 2016 , Jinhua Integrated Circuit, in cooperation with Lianhua Electronics, started the construction of the Fujian Jinhua storage integrated circuit production line project:

The project is located in Quanzhou Jinjiang Integrated Circuit Industrial Park, with a total planned area of 594 acres and an initial investment of 37 billion RMB. The construction includes wafer manufacturing and industrial chain supporting, and it is expected to reach a production scale of 60,000 12-inch advanced process memory wafers per month by September 2018, filling the gap in China’s mainstream memory field.

In December 2017 , Micron Technology filed lawsuits in both Taiwan, China, and the United States, accusing several former employees of leaking Micron’s Dynamic Random-Access Memory (DRAM) related trade secrets to Lianhua when they switched jobs. At the time, Lianhua was working on the development of the 32nm DRAM process with Fujian Jinhua. Micron believed that the DRAM chip technology developed in cooperation between Lianhua and Jinhua was stolen from Micron by former Micron employees who had left and switched to Lianhua, thus infringing on Micron’s intellectual property.

In January 2018 , Jinhua, unhappy with Micron’s allegations, countersued Micron Technology in the Fuzhou Intermediate People’s Court, requesting the court to order Micron to cease infringing its patents and pay 196 million RMB in compensation. Among the alleged infringing products mentioned in the lawsuit were Micron-manufactured, produced, processed, imported, used, sold, and promised to be sold Crucial MX300 2.5-inch SSD 525GB solid-state drives and Crucial DDR4 2133 8GB laptop memory modules. The company stated:

International oligopolies deliberately create technological blockades and even falsely accuse emerging domestic companies in an attempt to maintain their monopoly control. This has seriously violated the principles of a market economy and hindered the implementation of national strategies. As a newcomer to the memory industry, Jinhua has always attached great importance to the protection of intellectual property rights and will continue to actively defend its rights through various legal means, and will never tolerate any behavior that is suspected of infringing Jinhua’s patents.

Micron files

On May 15, 2018 , China’s State Administration for Market Regulation informed Micron that it was investigating potential collusion and other anticompetitive practices by Chinese DRAM suppliers. On May 31, 2018, the State Administration for Market Regulation conducted unannounced visits to Micron’s sales offices in Beijing, Shanghai, and Shenzhen to obtain certain information as part of the investigation.

In early July 2018 , the Fuzhou Intermediate People’s Court ruled that Micron Semiconductor (Shanghai) Co., Ltd. must immediately stop selling and importing more than ten Crucial Micron solid-state drives, memory modules, and related chips, and delete relevant product advertisements and purchase links from its website. At the same time, Micron Semiconductor (Xi’an) Co., Ltd. was ordered to immediately stop manufacturing, selling, and importing certain memory module products.

On October 29, 2018 , the U.S. Department of Commerce announced that it had added Fujian Jinhua Integrated Circuit Co. to its Entity List, restricting exports to the company, citing that the company’s newly added storage chip production capacity would threaten the survival of U.S. suppliers providing such chips to the military.

On January 10, 2019 , Jinhua pleaded not guilty in U.S. district court.

On January 25, 2019 , Jinhua Integrated Circuit submitted a letter to the U.S. Department of Commerce’s Bureau of Industry and Security’s End-User Review Committee, stating that the company was prepared to submit a formal appeal to have its name removed from the U.S. Department of Commerce’s Entity List.

On June 12, 2020 , three employees of UMC were sentenced to 5.5, 4.5, and 6.5 years in prison, and fines of NTD 5 million, NTD 4 million, and NTD 6 million, respectively, by the Taichung District Court in Taiwan. UMC was fined NTD 100 million.

In November 2021 , Micron announced a global settlement agreement with UMC, with UMC making a one-time payment to Micron of an undisclosed amount.

On January 27, 2022 , the Intellectual Property and Commercial Court of Taiwan revoked the original verdict and changed it to acquit the three employees and sentence them to 1 year probation and 6 months probation, respectively, and fined UMC 20 million NTD.

On February 15, 2022 , China’s “Cybersecurity Review Measures” came into effect.

On March 31, 2023 , in accordance with the “Cybersecurity Review Measures,” the Office of Cybersecurity Review conducted a cybersecurity review of Micron’s products sold in China.

In June 2023 , Micron Technology warned that about a quarter of its global revenue came from business in mainland China and Hong Kong. Subsequently, Micron pledged an additional investment of 4.3 billion RMB (602 million USD) to build its chip packaging factory in Xi’an, China.

On November 9, 2023 , Yangtze Memory Technologies Co., Ltd. (“Yangtze Memory”) filed a patent infringement lawsuit against Micron Technology and its subsidiaries in the U.S. Northern District Court of California. The complaint alleges that some of Micron’s 3D NAND products infringe on eight U.S. patents. The complaint seeks an injunction, damages, attorney’s fees, and other costs.

In November 2023 , Micron announced a global settlement agreement with Fujian Jinhua Integrated Circuit Co., Ltd.

The future focus of this matter will depend on whether the Office of Cybersecurity Review will conduct a cybersecurity review of Micron’s products sold in China again.

Many people are not very familiar with Fujian Jinhua Integrated Circuit Co., Ltd. Fujian Jinhua was established in 2016 with joint investments from Fujian Electronics Information Group, Jinjiang Energy Investment Group Co., Ltd., and others. It is an enterprise specializing in the manufacturing of Dynamic Random-Access Memory (DRAM) memory through cooperation with Taiwan’s United Microelectronics Corporation (UMC).

DRAM, as everyone knows, is the main memory of a computer, known for its fast read and write speeds, and is a critical component of computing devices. The DRAM industry has long been dominated by three companies from two countries: South Korea and the United States. The three companies are Samsung and SK Hynix from South Korea and Micron from the United States. It’s like a three-way battle for supremacy. Chinese users have long been at the mercy of these three companies, with memory prices skyrocketing due to various factors like fires and floods. Memory modules once became a valuable commodity, and due to our lack of technology, we were powerless.

The establishment of Fujian Jinhua was actually a national initiative to make a breakthrough in the DRAM industry.

Now, let’s introduce the litigation between Micron and Jinhua:

At the inception of Fujian Jinhua, it signed a technical cooperation agreement with UMC and entrusted UMC with the development of 32-nanometer DRAM-related technology. The technological achievements were to be jointly owned, and after the overall technology was completed, it would be transferred to Fujian Jinhua for mass production.

UMC is a semiconductor foundry company that provides advanced process technology and wafer manufacturing services, producing chips for various major applications in the IC industry. UMC is a global leader in semiconductor wafer manufacturing, second only to TSMC and Samsung, and slightly ahead of mainland China’s SMIC. Similar to SMIC, UMC also attracts talent from around the world. After the agreement was signed between Jinhua and UMC, three high-level executives from Micron left their positions and joined UMC, including Chen Zhengkun, who was the Senior Vice President of UMC at the time, and later served as the General Manager of Fujian Jinhua.

In December 2017, Micron filed a lawsuit against Fujian Jinhua and UMC in the United States, alleging that UMC, through Taiwanese employees of Micron, stole its intellectual property, including crucial DRAM technology, and delivered it to Fujian Jinhua. Fujian Jinhua, in turn, countersued Micron in January 2018, seeking an order for Micron to immediately cease infringing on Jinhua’s patents and claiming 196 million RMB in damages. In the same year, the U.S. Department of Commerce placed Fujian Jinhua on the Entity List for national security reasons.

In October 2020, UMC reached a settlement with the U.S. Department of Justice. The U.S. Department of Justice dropped its charges against UMC, and UMC admitted to infringing on one trade secret and agreed to pay a fine of 60 million USD. In November 2021, UMC reached a settlement with Micron ahead of Micron’s case, with both parties withdrawing their lawsuits, and UMC making an undisclosed one-time payment to Micron. United Microelectronics Corporation also announced its decision to suspend technology development for Jinhua. The development of Jinhua and even China’s storage chip industry has been severely hindered.

The planned development of Jinhua has remained only in the planning phase.

In May 2023, citing national security reasons, China prohibited operators of critical information infrastructure in the country from purchasing products from Micron, a U.S. storage chip manufacturer. This had a significant impact on Micron.

China and Hong Kong markets account for a quarter of Micron’s global total revenue. Micron’s filings revealed that the company faced the risk of halving its revenue in the Chinese market due to the Chinese ban. This has caused great distress to Micron.

The litigation between Micron Technology and Fujian Jinhua, including later interventions by government agencies in both China and the United States, is just a microcosm of the technology war between the two countries. Over the past few years, competition between China and the United States in the technology sector, especially in the semiconductor field, has become increasingly fierce. Due to the competition for technological advantage and market share, trade disputes and sanctions between the two countries have escalated. Many Chinese high-tech companies, including ZTE, Huawei, SMIC, and HiSilicon, have been targeted by the United States. The United States is making every effort to prevent China from challenging its technological dominance.

The intense competition between China and the United States has not benefited either side but has instead resulted in a lose-lose situation. Knowledgeable individuals in both China and the United States are aware of this issue and are currently trying to ease tensions in the economic and technological sectors. On December 21st, Boeing delivered a Boeing 787 Dreamliner to China’s Xiamen Airlines, marking the first direct delivery of a commercial aircraft to a Chinese airline by Boeing in four years.

Boeing 787

Among Boeing’s inventory of approximately 220 aircraft, 85 are already built but undelivered 737 MAX aircraft intended for China. Among the undelivered 60 Boeing 787 aircraft, 12 are designated for China. The delivery of Boeing 787s may pave the way for the resumption of deliveries of Boeing 737 MAX aircraft. It has been reported that Boeing has obtained approval from China’s aviation regulatory agency to prepare for the delivery of 737 MAX aircraft.

Boeing 737 MAX

The global settlement agreement between Micron Technology and Fujian Jinhua demonstrates that the competition between the two countries in the semiconductor field is not irreconcilable. Through dialogue and cooperation, both China and the United States can find ways to resolve disputes, promote mutual development, and the reconciliation between Micron and Fujian Jinhua is just a ripple in the tide of easing relations between China and the United States.

The United States should also understand that, whether it is a technology war or a trade war, all obstructive measures are futile. China’s rise cannot be stopped by anyone.

This is Micron’s attempt at redemption to regain the Chinese market; indeed, our massive market is our trump card.

Western attempts to block us repeatedly bow down in the face of our vast market. Capitalism is profit-oriented, and this is an inevitable aspect of the market.

Looking back, Micron was so arrogant and malicious, even when China’s mainland contributed one-third of its global revenue, it sued Fujian Jinhua, which was about to start mass-producing DRAM chips. Furthermore, Micron lobbied the U.S. Department of Commerce to sanction China multiple times.

In the end, Jinhua was blacklisted by the U.S. Department of Justice, forcing the production and operation of Fujian Jinhua, which was about to start mass-producing DRAM chips, to come to a standstill.

To get to the point, why did Micron reconcile with Jinhua?

It turns out that after Micron sued UMC, Micron was caught in a tight spot with its NAND Flash controllers controlled by UMC, causing embarrassment for Micron as it couldn’t deliver enough NAND Flash storage chips. Micron had no choice but to turn to UMC for reconciliation.

Micron thought that by showing a weak stance, it could continue to aggressively enter the Chinese market. However, in May of this year, Micron was informed that its storage chips were prohibited from participating in critical infrastructure projects in China.

What does this mean? Micron’s stabbing of Jinhua in the back vividly illustrates the principle that harming the enemy at the cost of self-injury is not beneficial. Jinhua was hurt, but Micron’s semiconductor business is no better off.

Micron, which was taught a harsh lesson while being trampled on the ground, knows where it went wrong. It began to apologize and contradict itself. It made several visits to the Department of Commerce, appointed a general manager for Micron China, and even announced an additional investment of 4.3 billion RMB in the Xi’an packaging plant.

Micron thought, “Isn’t my apology enough?”

Sorry, it’s not that easy.

Not long after, Samsung and SK Hynix announced multiple price increases for storage chips, and Micron Semiconductor began to tremble. When Yangtze Memory Technologies made a breakthrough in storage chip production and Changxin Memory began mass-producing DRAM chips, Micron couldn’t sit still. Especially when Jinhua started making 25nm DRAM chips without relying on foreign equipment, Micron completely fell apart!

In the end, the desperate Micron was forced into a global reconciliation with Jinhua.

The global reconciliation between Micron and Jinhua once again proves the truth that daring to fight guarantees victory and marks a new turning point for China’s semiconductor industry!

Moreover, since both Yangtze Memory and Changxin Memory have made varying degrees of technological breakthroughs, it is only a matter of time before Jinhua’s chip manufacturing achieves a breakthrough. For Micron, even if it doesn’t worry about chip equipment issues, what use is technology if it is restricted or loses a large market?

So, the competition between Micron and Jinhua has temporarily come to a close, which is another significant turning point for China’s semiconductor industry, following the return of Kirin chips. At this turning point, while American chip giants hesitate, Chinese chip companies continue to break through and develop confidently in adversity! This probably represents the meaning behind Micron’s continuous self-contradiction and surrender to Jinhua.

Of course, the reconciliation between Micron and Jinhua does not mean that the U.S. ban on Jinhua will be lifted, nor does it mean that China’s ban on Micron will be lifted. Still, it is enough to demonstrate a slight easing of the tense atmosphere between the two major countries in the semiconductor field and further indicates that the U.S.’s attempt to block China’s chips and semiconductors is approaching the brink of failure.

The Chief is truly a remarkable individual!

It’s just a matter of going with the flow of the situation. ChangXin has been selling domestic memory for several years, and now they come pretending to give JinHua some relief. Can they make up for the losses JinHua suffered before?

The major reconciliation between semiconductor giants in China and the United States involves two key players, Micron Technology and Fujian Jinhua Integrated Circuit Co., Ltd.

Let’s begin by looking at Micron Technology to understand the background. Micron Technology, through its global operations, manufactures and markets DRAM, NAND flash, CMOS image sensors, other semiconductor components, and memory modules for cutting-edge computing, consumer products, networking, and mobile devices. The company’s common stock is traded under the ticker symbol MU on the New York Stock Exchange (NYSE). In the early 1990s, Micron Technology established the subsidiary Micron Computers to manufacture personal computers, which later became Micron Electronics. In 1998, Micron acquired Rendition to manufacture 3D accelerator chips. In 2002, Micron was involved in a memory price-fixing scandal. On March 21, 2007, Micron Technology established its first factory in Xi’an, China, primarily producing DRAM and NAND flash memory.

Its tagline is: “A global leader in advanced semiconductor solutions.”

The trade conflict went through several rounds, with U.S. sanctions being the catalyst. On March 31, 2023, the Cyberspace Administration of China’s Network Security Review Office announced a cybersecurity review of products sold by Micron in China. On May 21, 2023, the Office of the Central Cyberspace Affairs Commission announced that Micron’s products sold in China did not pass the cybersecurity review. Operators of critical information infrastructure in China were legally required to stop purchasing Micron products.

Fujian Jinhua Integrated Circuit Co., Ltd., established on February 26, 2016, is registered in Jinjiang Integrated Circuit Science Park, No. 88 Lianhua Avenue, Jinjiang, Quanzhou City, Fujian Province, with Lu Wensheng as its legal representative.

Fujian Jinhua Integrated Circuit Co., Ltd. is an advanced integrated circuit manufacturing enterprise jointly funded by Fujian Electronic Information Group, Quanzhou Financial Holdings Group Co., Ltd., and Fujian Jinjiang Industrial Development Investment Group Co., Ltd.

In Chinese business practices, collaboration and win-win partnerships are emphasized. In contrast, the United States has intertwined its economy with politics and disrupted markets. The reality shows that cooperation is the way to win.

Approximately 25% of Micron Technology’s global revenue comes from the Chinese market. Starting this year, Micron Technology has begun repairing its relations with China. In June, Micron Technology announced increased investments in China, planning to invest over 4.3 billion RMB in its factory in Xi’an over the next few years. In November, Sanjay Mehrotra, CEO of Micron Technology, visited China and expressed the company’s willingness to continue expanding its investments in China during a meeting with Minister of Commerce Wang Wentao.

Reconciliation aligns with the mutual interests of both parties, and this prudent move should have been taken earlier.

Micron is one of the key battlegrounds in the Sino-U.S. technology arena, and another one is Boeing’s large aircraft.

In April of this year, the Cyberspace Administration of China issued a document to conduct a security review of Micron.

“To ensure the security of the supply chain for critical information infrastructure, prevent hidden product issues from causing network security risks, and safeguard national security, in accordance with the National Security Law of the People’s Republic of China and the Cybersecurity Law of the People’s Republic of China, the Network Security Review Office, in accordance with the Measures for Cybersecurity Review, conducts a cybersecurity review of the products sold by Micron (Micron) in China. This announcement is made accordingly.”

Then Micron’s market share in China plummeted, and its revenue sharply declined, leading to layoffs for survival.

The recently announced financial results for the second quarter of the fiscal year 2023 show that Micron reported only $3.693 billion in revenue during the reporting period, a staggering 52.6% year-on-year drop, with a net loss of $2.312 billion, making it the “worst single-quarter report in Micron’s history.”

The reason for the scrutiny of Micron is because its actions have indeed had an impact on China, fittingly matched with its predicament.

In May 2019, Huawei was banned by the United States, and Micron subsequently stated that it would comply with relevant regulations of the U.S. government, ceasing the supply of goods to Huawei and sending letters to its subsidiaries, requesting them to stop direct or indirect supply to Huawei and its affiliated companies.

Similarly, in early 2022, Micron announced the closure of its DRAM design business in Shanghai, requiring engineers to move to the United States or India. At the time, some media reported that increasing and intense technological competition between China and the United States played a role in the company’s decision.

In October 2022, Micron explicitly restricted shipments to China for equipment that could be used in the manufacture of 128-layer and higher 3D NAND and 18nm and lower DRAM, and even reported to the U.S. authorities “that Yangtze Memory was supplying Huawei,” which was shocking.

During Huawei’s peak, it contributed 13% of Micron’s revenue, making it one of Micron’s largest customers globally. Unexpectedly, as Huawei faced setbacks, Micron not only didn’t extend a helping hand but also stabbed it in the back.

On October 7, 2022, Yangtze Memory and Changxin Memory were directly included in the “Unverified List,” and on December 15 of the previous year, Yangtze Memory was formally included in the “Entity List.”

In addition, multiple media reports indicated that Micron had blocked a $650 million loan from the U.S. Export-Import Bank to SMIC in an attempt to hinder SMIC’s expansion into the international market. Think about it.

Even after being subjected to a cybersecurity review by the Chinese government, Micron continued to pressure the White House to request the U.S. government to prohibit semiconductor companies like Samsung from filling the market gap left by Micron in China…

Since 2018, Micron has lobbied the U.S. Department of Commerce and the Office of the U.S. Trade Representative the most among companies in the U.S. semiconductor industry, with over 170 lobbying submissions focusing on trade sanctions, 301 investigations, intellectual property protection, and nearly all targeting China.

This attitude, really doesn’t know the limits…

From 2017 to 2022, Micron forced United Microelectronics Corporation (UMC) to pay a huge fine and settlement through patent disputes, while causing significant damage to UMC’s partner, Fujian Jinhua, and the $3.2 billion investment in the DRAM project ended in failure, dealing a heavy blow to the domestic DRAM industry.

So, Micron’s surgical strike by the Chinese government is entirely self-inflicted.

Now that Micron has reached a settlement with Fujian Jinhua, it marks the end of the technological friction between China and the United States, but the five or six years lost by Jinhua cannot be regained.

Fortunately, there is still Yangtze Memory; otherwise, these past few years would have been a disaster for Micron…

The current power comparison between China and the United States, at least in terms of the economy, is already very close to the Cold War era of the United States and the Soviet Union. Leaving aside whether China will soon replace the United States as the world’s largest economy, the current situation is very clear. The two countries have deeply integrated in various industries, with intertwined interests. Damage to one side affects the other, and prosperity is mutually beneficial. Whether it is decoupling or confrontation, it will ultimately result in mutual harm, rather than easily forcing the other side to yield, let alone eliminating the other.

Therefore, verbal and even partial substantive confrontation may serve as a gesture to appease domestic political forces and public opinion when necessary, but if used as a long-term national strategy, it is very foolish.

The conflict between Micron Technology and Fujian Jinhua Integrated Circuit Co., Ltd. originated in 2016 when the latter signed a technology cooperation agreement with Taiwan’s United Microelectronics Corporation (UMC) related to 32-nanometer DRAM process technology. Three executives from Micron Technology subsequently resigned and joined UMC. Micron Technology then filed lawsuits against UMC and Fujian Jinhua in 2017, alleging that these two companies were involved in stealing Micron Technology’s trade secrets. Subsequently, Micron Technology initiated lawsuits in multiple locations worldwide to pursue claims against UMC and Fujian Jinhua for infringement, while Fujian Jinhua counter-sued Micron Technology for alleged product infringement in China. The two parties engaged in a protracted legal battle. With the cooling of China-U.S. relations after the pandemic, their commercial warfare naturally escalated.

In 2021, Taiwan’s United Microelectronics Corporation and Micron Technology announced a settlement, with the U.S. prosecutors agreeing to drop charges against UMC, including economic espionage. Just a few days ago, Micron Technology reached a global settlement agreement with Fujian Jinhua, formally withdrawing lawsuits against each other worldwide, thus ending the six-year confrontation. This is a very positive signal and a wise choice for both parties. Instead of wasting a significant amount of resources in mutual attacks, it is better to set aside past conflicts and focus on future cooperation and win-win outcomes.

This can be seen as a partial reconciliation between China and Micron (note that while this is a single American company, it is seen as having the shadow of U.S. government decisions).

Among all memory manufacturers worldwide, Micron is considered the most frequent user of “non-commercial competitive strategies” to counter competitors among U.S. companies. It fully utilizes the influence of the United States in international politics and its dominant position in the global semiconductor market, using measures such as patent infringement, lobbying for anti-dumping and anti-subsidy taxes to combat potential rivals through legal and policy means (such as intellectual property litigation, lobbying U.S. authorities to curb the Chinese semiconductor industry, etc.).

Micron summarizes this strategy as its biggest advantage: “a strong portfolio of patents and intellectual property."

Based on this, when facing the U.S. and Chinese markets, Micron has greater priority and better access opportunities compared to its two competitors (Samsung and SK Hynix from South Korea).

Therefore, the series of sanctions against Micron by CN (referring to CN’s requirement on May 21, 2023, that operators of critical IT infrastructure must stop purchasing Micron products) is, in my opinion, carefully considered and calculated. Because once the sanctions are implemented, it is equivalent to directly confronting the interest groups behind the U.S. government that supports Micron.

Such behavior itself is highly declarative , implying that CN faces U.S. technological blockade without fearing a “table-turning” confrontation. At the same time, it comes with some other strategic considerations, such as hoping to intensify the relationship between the United States and its allies (Micron’s partial vacancies are filled by South Korean companies Samsung and SK Hynix), making the U.S. semiconductor strategy more complex and significantly increasing the “policy cost” for the United States (the United States needs consistent action from allies, which requires political and economic costs, among other things).

Therefore, I view Micron as a unique projection in the complex game of China-U.S. relations, “thinking big with small actions.”

Of course, such strategies also change linearly with the situation. The core logic here is that CN’s series of sanctions against Micron will certainly have a certain deterrent effect, in retaliation for the U.S. technological blockade and bullying.

But this will also bring negative effects , which is the “long-term cost” of China’s counter-sanctions behavior I mentioned in previous answers because if U.S. companies believe that they will eventually fail in the CN market due to “geopolitical risks,” they may be more willing to accept the U.S. administrative authority’s overseas export strategy and avoid the Chinese market. And this, as U.S. allies become more deeply “bound” to the U.S. in terms of geopolitical structure, shows greater negative impacts (for example, South Korea, even if they do not withdraw from the CN market, due to the withdrawal of core competitors, this actually increases CN’s own usage costs).

In this context, unfortunately, CN’s position is inconsistent and unequal with the United States (and its allies). The United States (and its allies) objectively still has an advantage, which represents advanced technology, markets, applications, and, at the current stage, the more important “overseas investment.” So CN’s response cannot be the same as the United States', truly “an eye for an eye, a tooth for a tooth.”

In this scenario, “easing” to some extent with Micron helps to demonstrate the more urgent goal of “openness and attracting foreign investment.” Regarding this, everyone can refer to a piece of news: On November 30, the Ministry of Commerce received Micron’s president and his delegation. You can search for the news to see what was said in the press release at that time.

So, I believe that the “judicial reconciliation” with Micron as described in the news does not help improve the overall competitive situation between China and the United States, but it can still be seen as a certain degree of compromise and concession by both parties. This is considered a new normal that CN has adapted to under the unilateral technological pressure from the United States.

They will fight as long as necessary, fighting until complete victory!

Chronology of Events

  1. In 2016, Taiwan’s United Microelectronics Corporation (UMC) signed a technology cooperation agreement with Fujian Jinhua Integrated Circuit Co., Ltd. The agreement included assisting Jinhua in developing 32-nanometer DRAM-related process technology.

  2. After signing the agreement, three executives from Micron Technology left their positions and joined UMC.

  3. In 2017, Micron Technology filed a lawsuit against UMC and Fujian Jinhua, alleging that these two companies had stolen its trade secrets.

  4. Over the years, Micron Technology initiated infringement lawsuits against UMC and Fujian Jinhua worldwide. Meanwhile, Fujian Jinhua sued Micron Technology, claiming that its products sold in China infringed on patents.

  5. In 2021, UMC and Micron Technology announced a settlement, and U.S. prosecutors agreed to drop charges of economic espionage against UMC.

  6. On December 24, 23, a Micron Technology spokesperson announced via email that Micron Technology and Fujian Jinhua had reached a global settlement agreement. Both parties would terminate all previous lawsuits and withdraw their complaints globally.

Micron Technology

Micron Technology, a well-known company, is an American semiconductor corporation that primarily produces various types of memory and storage products, including DRAM and NAND flash. During the U.S.-China tech war, Micron Technology, as part of the U.S. tech industry, was influenced by Chinese policies and market conditions.

According to the 2022 annual report, Micron’s revenue in mainland China was $3.311 billion, a year-on-year increase of 34.8%, accounting for 10.76% of total revenue. China was once a significant market for Micron, with revenue accounting for over 50%, but it has now dropped to around 10%.[1]

According to Jibang Consulting data, in the fourth quarter of 2022, Samsung, SK Hynix, and Micron had market shares of 45.1%, 27.7%, and 23.0%, respectively, collectively occupying around 96% of the market. In the NAND Flash manufacturer revenue ranking, Micron ranked fifth with a market share of 12.3%. The top five companies, including Samsung, Kioxia, SK Group, Western Digital, and Micron, accounted for about 97% of the market.

Fujian Jinhua

Fujian Jinhua Integrated Circuit Co., Ltd. is a state-owned enterprise in China specializing in semiconductor research, development, and manufacturing, particularly in the production of DRAM memory chips. The company aims to enhance China’s self-reliance in the semiconductor field and reduce dependence on foreign technologies.

In 2017, Micron Technology accused Fujian Jinhua of stealing its trade secrets and filed a lawsuit in U.S. courts. Subsequently, the U.S. Department of Commerce imposed an export ban on Fujian Jinhua, prohibiting U.S. companies from selling technology and products to the company. This severely impacted Fujian Jinhua’s production and research activities.

How Micron Technology Got Its Start

Micron Technology, despite being known for its technology, did not start out that way.

In the development of DRAM, Intel and Mostek were the two giants. Intel once held an 82.9% global market share, while Mostek reached 85%. However, after Mostek was acquired, Micron was founded by its former employees and became a representative of the United States in the storage field after Intel exited in 1985.

Throughout the 1980s, Japanese companies dominated the storage sector, and Micron struggled to break through. To survive, they tried various businesses, such as manufacturing personal computers, entering the 3D accelerator chip market, and launching a CMOS imaging division, but none of them succeeded.

Micron achieved its current global market position with the help of the U.S. government’s administrative power and antitrust investigations. The 2002 investigation resulted in substantial fines for four other companies, while Micron escaped prosecution. This opened doors for Micron, making it the biggest beneficiary of trade wars and U.S. extraterritorial jurisdiction.

Additionally, Samsung and Hynix made large investments with the assistance of the South Korean government, avoiding the impact of economic crises. However, the other two companies did not receive such treatment. Infineon Technologies split its memory division to form Qimonda and went bankrupt in 2008, while Elpida Memory declined, leading to the restructuring of all Japanese DRAM companies.

Micron acquired the technology and assets of these companies through acquisitions and partnerships, including Numonyx and Elpida. Numonyx gained Qimonda’s DRAM technology and 46nm process technology, while Micron acquired 25nm DRAM technology through the Elpida acquisition. This made Micron one of the three giants in the DRAM market, alongside Samsung and Hynix.

Micron’s Sanctions on China

Starting in 2018, Micron submitted over 170 lobbying documents to the U.S. government, most of which targeted Chinese companies. More than two-thirds of these documents were related to Chinese companies and covered topics such as trade protection, intellectual property disputes, Chinese competition threats, and commercial espionage related to technology development, chip manufacturing, and immigration.

The most influential lobbying effort was Micron’s successful persuasion of the U.S. Department of Justice to sue Jinhua’s general manager, Chen Zhengkun, and two former Ruijing engineers. Micron accused them of stealing trade secrets, ultimately leading to an arrest warrant issued by the U.S. Department of Justice against Chen Zhengkun.

This incident highlighted Micron’s lobbying capabilities and the long-arm jurisdiction of the United States. Unlike in the past, where competitors were defeated through market means, Micron chose to use government administrative power to target its rivals, which was considered quite devious. Furthermore, the warrant for Chen Zhengkun set a precedent for the United States to exercise long-arm jurisdiction over foreign competitors under domestic law, with an impact similar to inciting Canada to arrest Huawei’s Meng Wanzhou.

Correspondingly, Micron cut off supplies to Huawei. On May 16, 2019, the day after the Huawei incident occurred, Micron immediately announced the suspension of supplies to Huawei. Although supplies were resumed more than a month later, it was essentially a forced move. Since then, none of Huawei’s high-end smartphones have used Micron products, with Hynix and domestic memory products taking their place.

Final Review Triggered by Sanctions

In May, an investigation was triggered, and in June, Micron announced plans to invest more than 4.3 billion yuan in its factory in Xi’an over the next several years.

Why Micron Settled

Continued Decline in Business in China

Micron’s revenue for the second quarter of fiscal year 2023 was $3.69 billion, down about 53% year-on-year from $7.79 billion in the same period last year. The company reported a loss of $2.31 billion, including over $1.4 billion in inventory losses.

Continued Losses in the Third Quarter

Micron’s revenue for the third quarter of fiscal year 2023 was $3.752 billion, down about 56.

I’m sorry, but it seems the text you provided is already in Chinese. Could you please provide the text in English that you’d like me to translate into Chinese?

Reconciliation is one thing, but continued scrutiny of Micron is necessary. Micron’s tricks have been exposed, and there’s nothing exceptional about it.

Samsung and SK Hynix can’t wait to see Micron continue to be sanctioned.

Micron has been actively undermining China’s semiconductor industry in the United States. Because its business is the most vulnerable to being jointly suppressed by Yangtze Memory, ChangXin Memory, Samsung, and SK Hynix.

The overall process of the Micron Technology and Fujian Jinhua case is as follows:

Fujian Jinhua planned to collaborate with Taiwan’s United Microelectronics Corporation (UMC) to develop the DRAM memory business.

Upon seeing competition arise, Micron immediately filed a lawsuit against Jinhua and UMC with the intention of disrupting their collaboration.

After Trump initiated the trade war, the United States resorted to despicable tactics.

They directly arrested several executives of UMC and sentenced them.

In the end, UMC had no choice but to yield and pay a fine of over 50 million US dollars. It is unclear whether the executives were imprisoned.

UMC’s collaboration with Jinhua came to an end.

After China achieved a breakthrough in the field of storage, it first targeted Micron.

Micron has a significant amount of business in China.

So Micron knelt and begged, no longer putting up a fight.

Technological breakthrough and defeating Micron in the market are inevitable. If Micron doesn’t make a technological breakthrough, it will eventually be defeated by China and South Korea in the market!

Cooperation is the key to mutual success! Technology requires profitability in the market, and the market relies on technological development.

In recent years, U.S. restrictions on our chip-related technology are nothing new. Because a significant part of our work involves high-performance computing that requires GPUs, the clusters were previously built by Huawei, and both the pricing and service were good. Last year, when it came time to upgrade the clusters, Huawei faced significant challenges in this business. The reasons behind this are well known. So, the impact on us is clearly felt, and many of you have probably seen similar news regarding smartphones.

This overarching context also has a negative impact on U.S. companies, for example, Micron Technology mentioned in the title. The origins of this issue may date back to 2017 when Micron Technology accused Fujian Jinhua of DRAM chip technology theft. Meanwhile, the United States has consistently cooperated with allies to prevent China from acquiring the latest chips. On our side, due to concerns about cybersecurity and other issues, Micron Technology’s chips are prohibited from entering our critical areas. For Micron Technology, the ban is said to affect over 10% of its global revenue.

After all, about a quarter of its global revenue comes from business in mainland China and Hong Kong.

Therefore, this news is a positive development amid the backdrop of the long-standing U.S. blockade of China’s semiconductor and chip technology.

Furthermore, Micron’s commitment to reinvest 4.3 billion RMB to build its semiconductor packaging plant in China also reflects a willingness to improve relations. Let’s hope this is a good start for future cooperation and mutual benefit. Moreover, what’s even more important is that our technology can continue to catch up, because true ownership of technology lies in our own hands; otherwise, it’s just “imported goods” subject to the control of others.

The interests of American capitalists are not entirely aligned with those of the United States.

We must deeply understand this point.

No matter how much China is criticized, its status as the world’s second-largest economy is a concrete reality. To contain such a behemoth, even a powerful country like the United States must pay a price and sometimes even accept sacrifices. Without a spirit of sacrifice, what’s the point of trying to contain China?

In 2023, China has indeed made some breakthroughs in the field of technology. However, from a historical perspective, the United States still maintains its accumulations and advantages.

If American society can unite and possess a strong sense of nationalism, what it should do now is not only refrain from reconciling with Chinese companies but also increase sanctions, continuing to “inflict a thousand wounds upon oneself to harm the enemy.”

Until victory is assured, we must not easily give up.

Statements like “China can no longer be contained, and American interests cannot be harmed” are all unpatriotic. In times of war, even sacrificing one’s life is not excessive.

How much did the British Empire spend to defeat Napoleon’s France?

How much did the British Empire spend to defeat William II?

How much did the British Empire spend to defeat Nazi Germany?

However, unlike other major capitalist countries, the United States is a nation that hasn’t fully embraced national identity. They cannot wield the powerful flag of “nationalism.”

Except for the military-industrial complex, almost all major capitalists view the United States as a vehicle for wealth incubation.

When it aligns with their interests, capitalists sing praises to the United States, saying “God bless America.” When it doesn’t, they engage in private negotiations and seek their own gain.

Take Micron Technology, for example.

In May of this year, China’s cybersecurity review office conducted a cybersecurity review of Micron’s products sold in China. The results revealed serious security risks in their products, posing significant security threats to China’s critical information infrastructure supply chain, affecting our national security. Based on this review, China halted the procurement of Micron’s products by operators of critical information infrastructure. China’s stance is clear: in times of conflict, the U.S. must also suffer. So, Micron was the target.

Soon, Micron paid a heavy price. The company’s revenue for the fourth fiscal quarter of this year (ending on August 31) was $4.01 billion, a 40% drop compared to the same period last fiscal year, which was $6.64 billion. The fourth fiscal quarter had a net loss of approximately $1.43 billion, with an annual loss of $5.83 billion. With such substantial financial losses, Micron Technology had to act.

In June, Micron announced increased investments in China, planning to invest over 4.3 billion RMB in its factory in Xi’an over the next few years.

In October, the U.S. Senate Majority Leader, Chuck Schumer, led a delegation to China, and one of the tasks was to plead for Micron, hoping that China would allow Micron to continue its business operations in the Chinese market. Schumer even visited Xi’an.

In November, Sanjay Mehrotra, CEO of Micron Technology, visited China and expressed the company’s intention to continue expanding its investments in China during a meeting with Minister of Commerce Wang Wentao.

In December, Bloomberg reported, citing a spokesperson for the U.S. semiconductor giant Micron Technology, that the company had reached a global settlement agreement with Fujian Jinhua Integrated Circuit Co., Ltd.

If one Micron can influence the U.S. Senate Majority Leader, what about Apple, Tesla, Qualcomm, Intel, or General Electric?

This is one of the main reasons why I personally believe the United States cannot absolutely suppress China: While the United States is indeed powerful, it cannot form a unified front, and its ability to endure damage is far inferior to China’s.

Under the call of the banner of nationalism, China could potentially fight to the last person, while the United States absolutely cannot.

In a showdown between great powers, life and death hinge on the final five minutes. When the decisive battle arrives, it’s not just about who has the greater strength; it’s also about who dares to sacrifice more.

This confirms the smooth progress of our country in the field of semiconductors.