March 27, 2006 – A Japanese court has ruled in favor of Toshiba Corp. in its NAND flash patent infringement suit against South Korean competitor Hynix Semiconductor Inc., and ordered Hynix to halt sales in Japan, according to news first reported by Reuters.

Toshiba filed the suit in 2004 alleging infringement of three patents involving NAND flash memory chips, following the expiration of a cross-licensing deal between the two companies. Hynix also has been ordered to pay ¥7.84 million (about US $66,500) in damages. Hynix indicated it would appeal the ruling, but noted that only a small percentage of its NAND flash sales are in Japan.

“The impact can be ignored as this is about 512Mb chips using 110nm technology, which Hynix rarely produces nowadays,” said Daewoo Securities analyst Chung Chang-won, quoted by Reuters, adding that Hynix sells only about 10% of its NAND flash to Japanese companies, some of which is sold outside of Japan.

Hynix already has had its business in Japan impacted, with a decision earlier this year to impose a 27.2% duty on DRAM imports from Hynix, following similar moves in the past two years from the US and Europe. The South Korean company has requested discussions with Japan, seen as a prelude to possibly bringing the dispute before the World Trade Organization for mediation.

Hynix finished just $80 million behind No. 2 Toshiba in terms of 4Q05 NAND flash sales. iSuppli projects that after a 64% increase in 2005, the overall NAND flash market will stay hot in 2006, growing another 55% to top $16.8 billion.