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Tuesday, September 14, 2004 - Page updated at 12:00 A.M.
Micron lawsuits not new in tech field, experts say
By Julie Howard
But industry analysts and financial experts aren't particularly concerned. And while Micron's legal expenses are climbing, the firm's top executive says it's a routine part of doing business in today's technology industry.
In fact, the Justice Department investigation and the class-action lawsuits that it prompted equally focus on Micron's top competitors: Samsung Electronics, Hynix Semiconductor and Infineon Technologies.
"Any litigation is a concern, and we have to take it seriously," Micron Chairman, President and Chief Executive Officer Steve Appleton said recently. "It's on our agenda as something we have to address. We don't have any more legal issues now than five years ago in aggregate."
Micron says losing just one of the current lawsuits a claim that the company is improperly using someone else's technology could cost it hundreds of millions of dollars. And three cases have prompted Micron to disclose to the Securities and Exchange Commission that a negative ruling could result in a "material adverse effect on our business, results of operations or financial condition."
Analysts who cover the semiconductor industry either declined to comment for this article or said Micron's legal issues weren't particularly troubling.
"I never care about legal issues of the industry," said Nam Hyung Kim, an iSupply senior analyst based in El Segundo, Calif. "They're always happening. None of the legal issues surrounding the DRAM market have impacted the market in DRAM history."
DRAM, or dynamic random access memory, is Micron's primary product and is used in personal computers and other electronic devices.
Lawsuits over patents are common. And Micron is one of the world's most prolific producers of U.S. patents. In 2003, Micron received more than 1,700 patents; in 2002, it received more than 1,800, ranking third in the nation for patents issued.
For three years, Micron has been ranked No. 1 in the semiconductor industry for its technological strength, which includes the ability to convert leading-edge technology into intellectual property.
"The semiconductor industry is perhaps more active than others in patent litigation," said Rod Lewis, Micron's corporate counsel and vice president of legal affairs. Lewis won't disclose Micron's legal costs or discuss specific, ongoing litigation. He acknowledged that legal issues can become burdensome to the point that they impact operations.
"There are some real concerns because there's an ever-increasing number of (patent) cases and there's a trend toward going after major manufacturers, particularly in the U.S.," Lewis said. "It makes it difficult to be a manufacturer here. We could be an IP (intellectual property) company and have someone in China manufacture for us."
While Micron isn't contemplating that scenario, Lewis says many companies have taken on that type of structure partly because of legal issues.
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