Targeting SSD Makers: Will US Make Indiscriminate Patent Litigation Attack against S. Korean Chipmakers? | BusinessKorea

Sunday, February 25, 2018

US-based memory chipmaker Bit Micro brought up comprehensive patent issues related to not only SSD but also software using SSD.
US-based memory chipmaker Bit Micro brought up comprehensive patent issues related to not only SSD but also software using SSD.
Seoul, Korea
2 January 2018 - 9:00am
Cho Jin-young

US-based memory chip maker Bit Micro has included major information technology (IT) companies at home and abroad, such as South Korea’s Samsung Electronics and SK Hynix, Taiwan’s ASUS and Acer, China’s Lenovo and Japan’s VAIO as well as U.S.’ HP and Dell, in the list of target litigation. It seems that the company is targeting solid state drive (SSD) producers, like Samsung Electronics and SK Hynix, and PC and server makers using SSD. The industry believes that SSD manufacturer Bit Micro brought up comprehensive patent issues related to not only SSD but also software using SSD.

Bit Micro filed a patent infringement lawsuit in the U.S. International Trade Commission (ITC) against IT major firms in large numbers regardless of national origin. However, the company is actually targeting South Korean memory chip makers, like Samsung Electronics and SK Hynix, according to industry sources. Samsung Electronics leads the global SSD market that is rapidly growing with a 30 percent market share, while SK Hynix is the seventh largest firm in the world with a 3 percent market share. Bit Micro excluded Intel, Western Digital, Toshiba, Seagate and Micron, which ranked second to sixth, from such litigations. This is why the company’s move is considered a commercial issue that put pressure on South Korean companies, which practically lead the global memory chip market, with the Section 337 of the Tariff Act, though it seems to be a patent dispute on the surface of it. An official from the industry said, “We can’t confirm what specific SSD technologies Bit Micro is filing a suit for at the moment but SSD manufacturers, including Samsung and SK Hynix, and server and PC firms that use SSD produced by them are within gunshot. So, South Korean companies can be adversely affected at the worst.”

This is not the first time for U.S. semiconductor firms to ask its own government to limit imports of South Korean products under the pretext of patent infringement. In October last year, U.S. semiconductor firm Netlist brought an action at the ITC for infringement of patents related to the server memory module technology. The company took legal action again after it was concluded that the server memory module technology didn’t violate its patents at the litigation that it filed in 2016 for a similar technology. In September last year, Tessera Technologies filed a complaint in the ITC against Samsung Electronics for violating its patents regarding wafer level packaging. The company called for a ban on the import and the sale of not only Samsung Electronics’ memory chips but also smartphones, tablet PCs and laptops equipped with Samsung’s semiconductor products.

With the series of such moves, there is mounting tension in the semiconductor industry. In fact, the semiconductor industry is in different situation from home appliance, steel and chemical industries that are recently suffering from the anti-dumping issues. These industries experience supply excess but the semiconductor industry show supply shortages. In this context, the U.S. seems to be seeking to tame semiconductor powerhouse South Korea with patent litigations. An official from the semiconductor industry said, “In order to lead pending litigations in the U.S. court in favour of them, they even filed a suit in the ITC. After the Trump administration took office, they might think that it is worth trying to ask the ITC to impose restrictions on imports.”

The U.S. is not the only country that targets South Korean memory chips when companies complain to the government and the government accepts them. China also shows signs of such move. The National Development and Reform Commission (NDRC), which is in charge of implementing regulations on China’s economic sector, recently said, “We are watching the possibility of the increase of smartphone memory chips prices leading to price fixing.” This came after Chinese smartphone companies requested the NDRC to begin investigation.

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