Micron, Sinovel and Taiwan, China

Now we see another aspect of the Taiwan, China naming convention China is insisting on.  Fox ran a story on Fox Business today that is worth noting, because this has been coming for a long time.  The Chinese are pressing all their companies to file patents on their technologies - no matter how they are acquired - so the government can protect them from infringement from outside China.  China files more patents in the US than we do.  So, as the story was expressed today, the Chinese stole technology.  A company used that technology in manufacturing in Taiwan.  The Chinese claim Taiwan as their own, so they can take this “infringement” to their own courts and find against the likes of Micron.  The Court then decided the remedy was to ban chip sales in China by Micron.  Micron stock drops like a stone, which is what China wanted anyway.  When that happens they can buy assets of Micron and start the whole process of again.

I have written about this for a long time, since the solar panel management  business went the same way.  The Chinese stole the technology, ignored our complaints, then manufactured the very same devices using stolen software to manage the generators.  They imbedded the technology in product in that case.  As a note to this, China’s highest court has finally ruled against Sinovel Wind Group for infringement - this week - after a crime that occurred in 2011 and has dragged on through lower courts all this time.  In the meantime, Sinovel had already damaged the patent holder by imbedding and distributing the software.

But, there is a similar case, Aixtron which happened in a different way.

Chinese vendors cut orders, dropped the stock price, then tried to finance a purchase of the German company.  They would get the intellectual property and the manufacturing capability and secrets that go with that.  CFIUS managed to stop that on National Security grounds, but not without a fight.  The complete story did not come out until the investigation.  How many times China has gotten away with this nobody knows.

This is wholesale abuse of a long trusted system which protects a company from intellectual property theft.  Micron’s Board is probably rethinking its decision to allow operations in China with sensitive patented materials involved.  Access to those markets looked good in those days, but doens’t look so good now.  I have no sympathy for them.  They knew the risks; they took the short-term benefits over the long term profits.  The rest of those Chinese businesses should take note.  All those Chinese customers are of no value if you can’t have access to them for long enough to enjoy the benefits.