Posted on: Tuesday, September 28, 2004
Micron says legal costs could hurt bottom line
By Julie Howard
The (Boise) Idaho Statesman
BOISE, Idaho — Micron Technology belongs to one of the most legally contentious industries in the world.
Darin Oswald • Gannet News Service And that's just for starters.
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."
Micron's legal costs are escalating as it faces lawsuits that have erupted in the past two years. The Justice Department in June 2002 began a continuing investigation on price-fixing, prompting two dozen civil lawsuits around the country that have been consolidated into one case in California.
The Justice Department investigation and class-action lawsuits equally focus on Micron's top competitors, Samsung Electronics, Hynix Semiconductor and Infineon Technologies. Rambus Inc., a California firm, is also suing Infineon for royalty payments.
But industry analysts aren't particularly concerned. And although 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.
"Any litigation is a concern and we have to take it seriously," said Steve Appleton, Micron's chairman, president and chief executive officer. "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."
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 Corp. senior analyst based in El Segundo, Calif. "They're always happening. None of the legal issues surrounding the DRAM market" have hurt the market.
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.
The world's third-largest maker of electronic memory faces more than 25 class-action lawsuits, claims of fraud and a U.S. Department of Justice investigation.
Rod Lewis, Micron Technology's corporate counsel and vice president of legal affairs, says "the semiconductor industry is perhaps more active than others in patent litigation."
