US places Idaho chip maker at center of fight against China

Last week, the Trump administration targeted Fujian Jinhua as part of a major escalation of its campaign against alleged economic espionage. On Thursday, the Justice Ministry accused Fujian Jinhua, a Taiwanese company and three Taiwanese individuals, of plotting to steal trade secrets from Micron. The accusations are displacing the Chinese government's attack against intellectual property theft in China, beyond the tariffs and harsh words.

The charges, as well as the ban made to US companies to do business with Fujian Jinhua, give Micron "the advantage" in its entanglement with the Chinese company, said Mehdi Hosseini, analyst in semi -conductors at Susquehanna International Group. "They now have more ammunition to ensure that the memory industry in China is marginalized," he said.

Micron (MU), founded in 1978, is the largest manufacturer of memory chips in the United States and is in direct competition with the largest players in the global market, according to Hosseini.

Micron sued Fujian Jinhua and Taiwanese semiconductor company UMC in California federal court in December 2017. Micron said that by 2015, UMC and Jinhua had developed a plan to get former employees of the subsidiary Taiwanese Micron to steal the trade secrets of Micron and deliver them to UMC, who would then transmit them to Jinhua.

According to Micron's complaint, UMC would receive $ 700 million worth of research and development equipment, receive royalties, and co-ownership of the resulting technology.

Former employees of the Micron subsidiary in 2015 and 2016 managed to steal technical secrets from the company by downloading confidential data on their laptops, removable drives and Google drives before they left the company. company, said Micron.

Micron said it had learned of the existence of the export ban imposed by the Trump government after its announcement on Tuesday. "Micron strongly supports fair global trade and intellectual property protection," a spokesman said in a statement.

On Thursday, after the Justice Ministry announced the charges against Fujian Jinhua and UMC, the Micron general attorney hailed the agency's decision to "prosecute the criminal theft of our intellectual property" .

UMC said Friday in a statement that it "takes seriously any allegation that it would have violated laws" and "fully intends to respond to [the Justice Department] allegations accordingly. "

It is not surprising that Micron has stated that it appreciates the government's lawsuit.

"This lawsuit puts newcomers out of China," said Hosseini. While China is injecting billions of dollars in technologies such as semiconductors, it is a vital benefit.

Impact of the trade war

The complaints of economic espionage of Micron are legitimate. But bringing charges against the Chinese firm also serves a political purpose to the Trump administration.

Fujian Jinhua probably can not operate without access to US software and technology, analysts said.

"These actions are intended both to increase the leverage in the ongoing negotiations and to deter others," said Scott Kennedy, China Economics Expert at the Center for Strategic Studies. and international. "The United States will no longer follow the rules of the standard game because they have only emboldened China."

When the United States attacked the Chinese company ZTE telephony and telecommunications equipment at the beginning of the year, they said it was the result of specific violations related to the sanctions. The introduction of export controls based on a national security logic is different, according to Dan Wang, a technology analyst at Gavekal Research.

"Contrary to ZTE's ban, the US action against Fujian Jinhua does not constitute a single sanction for a specific offense, but a much broader element of policy", a- he said this week in a note citing the language of the US government.

The Commerce Department said that Fujian Jinhua threatened the supply chain with essential military components.