Micron Technology Inc is in deep trouble, as the company is being sued by Lucent Technologies over alleged unpaid royalties, is struggling with an increasing backlog of DRAMs and – according to Korean news reports – has had its latest SDRAM chips rejected by major OEM customers.
Lucent claims that Micron has not paid any royalties on seven patents it licensed from the company – relating to memory chip circuitry and semiconductor manufacturing – for two years. In the suit, Lucent says that Micron owes $7m in royalties and fees. The suit was filed on June 25 with the US District court in Delaware. Amy Kliener, external communications manager at Micron, said that the company would defend the lawsuit vigorously.
Micron is also facing problems with its stockpile of DRAM chips. Kliener admitted that there had been an inventory increase over the last quarter, but declined to reveal how much the stockpile had grown by. However, reports suggest that the firm has over six weeks’ worth of surplus chips and is offering special deals to its OEM customers. Kliener refused to comment on the reports but said, it’s a difficult market for everyone right now. Micron was one of the companies that leapt on the back of the expected revival of the DRAM market at the start of this year, aggressively stepping up production of 64Mb memory chips. However, the market didn’t pick up in the way that some analysts had expected and Micron has been left with a surplus.
However, if reports from Korea are true, a glut of memory chips is not the worst of Micron’s problems. Reports suggest that the new 0.21 micron process 64Mb SDRAM chips that the company has started producing in all of its manufacturing plants have been rejected by Dell Computer Corp, Compaq Computer Corp and Hewlett-Packard Co on quality grounds. The reports suggest that three months’ worth of product, up to 450 million chips, have been wasted because of a quality control problem common to all of them and that production lines would have to be reworked. Kliener dismissed the reports as rumor. Dell, Compaq and HP were unavailable for comment.
