Fighting back against "big girl" Micron

Recently, South Korea's lawsuit against Micron has been a shock to many. For American companies, South Korea has always been more about cooperation and peace than conflict.

South Korea's patent management company, Mimir IP, has filed a patent infringement lawsuit against Micron Technology, marking a significant event in the semiconductor industry. This is the first case of a South Korean non-practicing entity (NPE) suing an American semiconductor company. The lawsuit, filed on June 3, also targets companies that use Micron's products, including Tesla, Dell, HP, and Lenovo. The case has been submitted to the United States District Court for the Eastern District of Texas and the United States International Trade Commission (ITC).

As we all know, SK Hynix and Micron are competitors in the memory market. South Korea's formal lawsuit against Micron could it mean that the battle for semiconductor dominance is expanding from technological competition to patent wars? The current situation of Mimir IP's lawsuit against Micron and its extensive impact on the semiconductor industry remains to be seen.

01

Who is the "lady" that everyone is pointing at and hitting?

Micron's last major controversy was in China, but the "fate" between Micron and China began 7 years ago.

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Micron vs. Fujian Jinhua

In May 2016, UMC announced that it had accepted a commission from Jinhua to develop DRAM process technology. UMC was only responsible for technology development and did not enter the DRAM industry or invest in Jinhua. In this cooperation, Jinhua paid the technology compensation, and the developed DRAM technology results would be jointly owned by both parties.

In July 2016, the groundbreaking ceremony for Fujian Jinhua's first 12-inch wafer factory was held.In February 2017, Micron sued UMC for violating the Trade Secrets Act, claiming that employees who jumped from Micron to UMC stole Micron's secret information. In December 2017, Micron filed a civil lawsuit against UMC and Jinhua in California, accusing them of infringing Micron's DRAM patents. Micron claimed that UMC stole its intellectual property, including key DRAM technology, through Micron's employees in Taiwan, and delivered it to Fujian Jinhua. In January 2018, Fujian Jinhua and UMC filed a complaint with the Fuzhou Intermediate People's Court, suing Micron for infringement of related products, including infringement of several Micron solid-state drive products, and demanded compensation of RMB 196 million from Micron. On October 29, 2018, the U.S. Department of Commerce added Fujian Jinhua to the Entity List of the Export Administration Regulations on the grounds of threatening U.S. national security, and U.S. companies were prohibited from selling software, technology and products to it. The next day, all personnel of American chip equipment manufacturers stationed in Fujian Jinhua were withdrawn, all equipment installation and process debugging were terminated, and all chip equipment that had been ordered but not shipped was suspended. Fujian Jinhua's factory was forced to temporarily stop production. In November 2018, the U.S. Department of Justice sued Fujian Jinhua, Taiwan's UMC, and three Taiwanese including Chen Zhengkun, accusing them of conspiring to steal Micron's trade secrets. Fujian Jinhua issued a statement saying: Jinhua Integration has always attached great importance to intellectual property protection, and there is no behavior of stealing other companies' technology. On November 26, 2021, UMC and Micron jointly announced that UMC and Micron Technology announced today that they had reached a global settlement agreement and would withdraw their lawsuits against each other. UMC will pay Micron a one-time confidential settlement amount. Both parties said in the statement that they look forward to achieving common business cooperation opportunities in the future. On December 24, 2023, a Micron Technology spokesperson said that Micron has reached a global settlement agreement with Fujian Jinhua Integrated Circuit Co., Ltd. The two companies will withdraw their lawsuits against each other worldwide and end all lawsuits between the two parties. However, the United States eventually put Fujian Jinhua on the "Entity List". 02 ResistanceWhere there is oppression, there is resistance. If one acts like a bully for too long, it's inevitable to "get one's feet wet".

Yangtze Memory Technologies (YMTC) sues Micron for patent infringement

China's leading chip company, Yangtze Memory Technologies, recently filed a lawsuit against Micron Technology Inc. and its wholly-owned subsidiary, Micron Consumer Products Group LLC, in the United States District Court for the Northern District of California, alleging infringement of its eight U.S. patents. The patents involved in the case relate to technologies such as 3D NAND storage devices, non-volatile storage devices, and Through Array Contact (TAC).

In the patent infringement lawsuit, YMTC claims that Micron has used its patented technology without authorization, which constitutes an infringement. The company is requesting the court to issue a permanent injunction on Micron's products or to pay patent licensing fees.

Both parties have responded to the lawsuit. Although they cannot disclose specific details, YMTC stated that they are committed to protecting their intellectual property rights and believe that the lawsuit will be resolved soon. Micron, on the other hand, has chosen not to comment.

As the largest 3D NAND Flash (flash memory chip manufacturing) company in China, YMTC mentioned in the lawsuit that Micron used its patented technology to counter the competition from YMTC and to gain and protect market share. The lawsuit aims to address one aspect of the issue: Micron's attempt to prevent competition and innovation by forcing YMTC out of the 3D NAND Flash (flash memory) market.

Some experts believe that, based on the current information, YMTC is almost certain to win this lawsuit. This fully demonstrates the tremendous progress of China's storage technology and also shows the brave counterattack of Chinese companies in the face of unfair treatment.

Micron ordered to pay $445 million in damages to Netlist

In May, a jury in the United States District Court for the Eastern District of Texas ruled that Micron infringed on two of Netlist's patents related to memory module technology and must pay $445 million in damages.

According to the court's judgment, Micron must pay $425 million for infringing on patent 7,619,912 and $20 million for infringing on patent 11,093,417.

In the document, the jury also stated that they believe Micron intentionally infringed on the patents, which may entitle Netlist to demand an increase in the total compensation amount to up to three times.Despite a spokesperson for Micron Technology stating that Micron disagrees with the jury's verdict, the facts speak louder than words.

Korean companies are also not holding back.

On June 17th, according to a report from the Korean media outlet Businesskorea, South Korean patent management company Mimir IP filed a lawsuit against the memory giant Micron in the United States on June 3rd, seeking $480 million (approximately 3.492 billion yuan) in damages. Mimir IP had previously acquired 1,500 semiconductor patents from SK Hynix in May, and the lawsuit involves six patents related to circuits, voltage measurement devices, and non-volatile memory devices.

03

Surrounded by adversaries: HBM is late to the game

If the lawsuits have only lightly impacted Micron, then the technological lag is the real threat facing the company. With the rapid development of artificial intelligence and high-performance computing, the performance requirements for memory are increasingly high. Against this backdrop, High Bandwidth Memory (HBM) technology has emerged, becoming a key force in driving the rapid development of the LLM industry. Currently, the HBM market is growing at a compound annual growth rate of about 65%, and is expected to reach between 17 billion and 18 billion US dollars by 2026. In the field of HBM technology, Hynix, Samsung, and Micron have become the leaders in this field with their outstanding R&D capabilities and innovative spirit.

SK Hynix is a pioneer in HBM technology, with the strongest technology, and was the first to cooperate with AMD in development, followed by Samsung. Samsung and Hynix monopolize 90% of the HBM market, with Micron lagging behind in market share.

Micron's development in the HBM field has not been smooth sailing. Due to various factors, Micron has traditionally been in a weak position in the HBM field. In the early stages, Micron misjudged the technology and invested too much money in HMC technology, and it was not until 2018 that it shifted from HMC to the HBM direction. Therefore, not wanting to miss the last train, Micron skipped HBM2 and directly started mass production of HBM2E in 2020, entering the market as a newcomer and quickly accelerating past HBM3 to develop HBM3E in 2023. In February 2024, it announced the start of mass production of HBM3E and applied it to NVIDIA's H200 chip, a long-term partner of SK Hynix, which will supply NVIDIA with HBM3E 8Hi 24GB chips in the second quarter of this year, while the HBM3E 12Hi 36GB is already in the sampling stage, with the bandwidth of these two models exceeding 1.2TB/s.

At the end of May this year, news also emerged that Micron's DRAM factory would be delayed. According to the "Electronic Times," Micron announced in 2023 that it would invest up to 500 billion yen (3.2 billion US dollars) to introduce EUV equipment to Hiroshima. The initial goal was to start mass production of the most advanced DRAM there by the end of 2025. The latest news indicates that the construction of the factory may be delayed by two years. After the completion of the factory, it will produce the next-generation computer memory technology 1-gamma DRAM. It will also produce high-bandwidth memory (HBM) for generative AI.

SK Hynix has announced the development of HBM4 and signed a memorandum of understanding with TSMC on the development of HBM4 and the next generation of packaging technology, planning to start mass production of the sixth generation of HBM products - HBM4 - from 2026. SK Hynix is expected to use TSMC's advanced logic process to improve the performance of HBM4, optimizing the basic bare die mounted at the bottom of the HBM package. TSMC has also previously stated that it will use the N5 and N12FFC+ processes to manufacture the basic bare die, providing stronger performance and energy efficiency for HBM4. Micron is one step behind again.Micron has rapidly become a significant threat to Korean manufacturers, one of the main reasons being its energy efficiency advantage. Micron claims that its stacked 24GB HBM3E memory consumes 30% less power than its competitors. In the current era of surging AI demand, low-power technology is gradually becoming a focus of attention in the industry. The more energy-efficient HBM3E memory can reduce system heat generation and electricity consumption, thereby decreasing the demand for cooling.

Furthermore, the United States is eager to increase its semiconductor self-sufficiency rate. Against this backdrop, Micron has received substantial financial support from the U.S. government, enabling it to build large-scale storage wafer factories. Micron's American identity also makes it easier to engage with Intel and AMD, the other two AI chip companies, and secure more HBM orders.

In terms of production capacity, according to TrendForce's research report in March this year, Micron's HBM production capacity at the end of 2023 was only 3,000 12-inch wafers per month, accounting for 3.2% of the overall market. By the end of 2024, Micron is expected to achieve an HBM production capacity of 20,000 wafers per month, with the market share significantly increasing to 11.4%.

Regarding Micron's future products, its 12Hi HBM3E memory with a single stack capacity of up to 36GB has completed sampling in early March and is planned to be mass-produced in 2025. Looking further into the HBM4 generation, Micron plans to develop HBM4 memory in the second half of 2025, with the development of HBM4E expected to be completed in 2028.

Has Micron's Plan A failed, and can Plan B bring it back to dominance? Time will give us the answer.