For a long time, the theft of U.S. corporate secrets or espionage campaigns from China-based entities was largely seen as China playing catch-up to America’s advanced technological prowess. Fast forward to 2024, and U.S. corporations are finding out that any accusations of theft can be more than difficult to prove. Or, in the case of chip stock Micron (NASDAQ:MU), holding onto crucial market share can mean taking steps to appease Beijing. Still, Micron is rallying today despite seeing its Chinese espionage case fall flat.
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Back in 2017-18, a Chinese state-owned firm (Fujian Jinhua Integrated Circuit Co) and its Taiwanese partner (United Micro) were accused of stealing trade secrets from Micron. At the time, the Commerce Department had barred any export or transport of U.S.-origin tech to Jinhua.
In retaliation, Fujian Jinhua sued Micron in a Chinese court, winning a temporary order to restrict some of Micron’s units from selling its goods in China. This year, a federal judge in San Francisco acquitted Fujian of charges of espionage and conspiracy.
The verdict is a major defeat for both Micron and the Justice Department. In this years-long process, large Chinese companies were banned from sourcing from Micron due to national security concerns. Subsequently, Micron announced a nearly $600 million production expansion in China, demonstrating its “Commitment to China’s business and Chinese team members.”
Yet, Jinhua’s acquittal, owing to a lack of sufficient evidence, leaves room for history to repeat itself over the coming periods. The verdict also casts doubts over America’s ability to counter corporate espionage and theft of trade secrets.
Despite these challenges, Micron’s stock price has soared by nearly 66% over the past year amid an AI-fueled buying frenzy. This month, analysts expect Micron’s net loss per share for Q2 to narrow to $0.27 from $1.91 a year ago. Concurrently, its top line is expected to rise to $5.31 billion from $3.69 billion.
Is MU a Good Stock to Buy?
Overall, the Street has a Strong Buy consensus rating on Micron. However, an average price target of $96.75 indicates the stock may be hovering at fair valuation levels at present.
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