SK Hynix, the world's second largest memory chip manufacturer, has faced with a patent dispute in the second half of the year amid suffering from oversupply of memory chips in the first half.

The United States International Trade Commission (ITC) announced on October 3 (local time) that it has launched an investigation into whether SK Hynix’s server DRAM products on the U.S. market infringed six patents of Netlist.

Netlist is asking the ITC and District Court to ban SK Hynix from importing the products into the U.S. and seize them on the U.S. market. The ITC investigation will proceed against SK Hynix for a year. Once the investigation is completed, it will decide whether to impose sanctions on SK Hynix or not. The ITC’s sanctions become effective in 60 days after the decision is made as long as there is no opposition from the U. S. federal government.

Although Netlist is a U.S.-based server semiconductor manufacturer, it is led by Korean experts in the semiconductor industry. Hong Choon-ki, founder and CEO of Netlist, worked at LG Semiconductor Co., which was merged with SK Hynix in 1999, until 1998. Kim Ji-beom, manager of Korean branch of Netlist and former sales manager for the Asia-Pacific region, was also in charge of DRAM design and sales at SK Hynix. In particular, Netlist attracted the investment worth US$23 million (25.4 billion won) from Samsung Electronics last year, though it was a small company.

SK Hynix thinks that the effect of the patent dispute will be limited. A SK Hynix official said, “Since the ITC’s investigation is still in its early stages, it is hard to expect results. The dispute with Netlist can end with no much damage as the company rounded off a decade-long legal battle over memory chip technology with Rambus. As SK Hynix signed an agreement with Rambus on a new license deal that would cost the South Korean company a total of US$240 million (267.36 billion won) in 2013, it ended all legal claims over patent infringements and antitrust lawsuits around the world.

However, industry sources expect that SK Hynix can see its losses surpass 900 billion won (US$807.9 million) when the ITC accepts Netlist’s claim that SK Hynix violated its patents and bans SK Hynix products from importation into the U.S. They believe that SK Hynix’s server DRAM semiconductors supplying to North America accounts for nearly 5 percent of the total sales. Considering the fact that SK Hynix’s sales were estimated at 18.8 trillion won (US$16.88 billion) last year, the company can face losses of up to 940 billion won (US$843.81 million) according to the ITC’s decision.

By: DocMemory
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