Posted by: Ihlwan Moon on November 19, 2008
To hear Spansion’s claim filed in the U.S. against South Korea’s Samsung Electronics, the two companies face a legal battle that will have enormous repercussions in both semiconductor and consumer electronics markets. The claim, filed with the International Trade Commission and the U.S. District Court in Delaware, seeks an import ban on some 100 million electronic devices, including Apple’s iPod and Research in Motion’s BlackBerry. That’s because those products (many of them music players, cell phones and digital cameras) contain Samsung’s memory chips that infringe on Spansion’s patented technology, according to Spansion based in Sunnyvale, California.
Yet, investors in Samsung shares brushed aside the claim. On the Seoul bourse, Samsung shares rose 0.7% on Nov. 19 when the market’s benchmark Kospi index fell 1.8%. “I don’t think anybody is really paying much attention to Spansion’s legal action against Samsung, at least for now,” says Song Myung Sup, semiconductor analyst at brokerage HI Investment Securities. That hardly appears a market response to “one of the largest patent infringement claims ever filed” – the description by Spansion on its move.
At the heart of the dispute is NAND flash memory chips used to store data, songs, pictures and videos in portable gadgets. While Spansion doesn’t make NAND chips, the company says its patents cover the fundamentals of all flash-memory chips. Executives at Spansion, which hasn’t had a profit since it went public in 2005, say the company’s patents should allow it to charge significant license fees on NAND products.
If things pan out as Spansion sees, the implications are massive. The NAND chips are used at all sorts of portable electronic devices and could soon start replacing hard drives in servers at data centers (So called solid state drives using NAND chips are quicker and consumes less energy than hard drives). Samsung controls more than 40% of the $12 billion NAND market. Among other NAND makers are Toshiba, Micron Technology and Hynix Semiconductor.
The ITC, which can act in 15 months or so if it decides to investigate a complaint, has the power to ban imports of items found to violate U.S. patents. Samsung spokeswoman Park Sung Hae says her company plans to “respond actively” to the litigation and is committed to protecting and respecting patents and forbids infringements. Park declined to give further details.