Micron’s tangles with China fuel Trump’s trade war; How deal could impact the Boise company

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Boise’s Micron Technology remains at the center of the Trump administration’s trade war with China.  Last week, President Donald Trump and his trade team announced a deal aimed at lowering the temperature of the ongoing trade war.

A new New York Times story posted early Monday looks at Micron’s role in the ongoing struggle, as China and the United States increasingly isolate each other’s economy and work to decrease reliance on each other.

Trump met with Micron CEO Sanjay Mehrotra last spring, and later cited the company’s challenges with China in recent years.

“To advance the Chinese government’s five-year economic plan, a company owned by the Chineses state allegedly stole Micron’s designs, valued at up to $8.7 billion,” Trump said in a speech at the United Nations. “Soon, the Chinese company obtains patents for nearly an identical product and Micron was banned from selling its own goods in China. But we are seeking justice.”

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In 2015, Micron spurned a takeover offer from Chinese company Tsinghua Unigroup.  Obama administration regulators also weighed in with questions about the deal.

Then, the US Department of Justice asserts many of the company’s secrets were stolen and used by a Chinese competitor.  Finally, Micron saw its business blocked from China’s markets.

The NYT report said the latest trade deal offers potential relief for Micron, but could cost it in the long run.  The deal would allow Micron to sue companies and individuals in China that steal trade secrets.

But the government’s ban on Chinese tech. company Huawei could hurt Micron’s bottom line.  The administration previously barred Huawei from operating in the US and partially kept US companies from working with it.  But according to the Times, the ban only pertains to products that contain more than 25% of tech developed in the US.  But the paper said the US Department of Commerce is considering lowering that threshold.

Thirteen percent of Micron’s chips are sold to Huawei.

Impact on bottom line

Mehrotra admitted in a September earnings call that the ongoing battle could hurt its bottom line.

Over the past year, Micron’s stock saw big swings, but traders currently value it near its high for the year, and just shy of its five year peak.

The deal does not stop China from using state power to build industries, including subsidies and state-owned companies.  As the Times notes, China used these techniques in other industries like steel, which put scores of American companies out of business.

Micron says it will continue to engage with the Trump administration.

“We look forward to additional discussions between the countries on significant issues that are important to Micron and the semiconductor industry, such as intellectual property protections and subsidies,” Jon Hoganson, Micron’s managing director of global government affairs said in a statement to the Times.

Correction: A previous version of this story, citing the NY Times report, said Micron sold microprocessors to Huawei. It sells memory chips and related products, not microprocessors.

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