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The firm's estimate that the ban imposed by a Chinese court in a patent infringement lawsuit would weaken quarterly revenue by just 1 percent drove its shares as much as 3.6 percent higher and lifted stocks of other USA chipmakers.

The company also confirmed in a statement for the first time two of its units had been temporarily banned from selling some memory chips and solid state drives in China, following a complaint from rivals United Microelectronics Corporation (UMC) and Fujian Jinhua Integrated Circuit Co.

What just happened? U.S. semiconductor giant Micron has had sales of its chips temporarily banned in China by one of the country's courts.

The chipmaker said it would comply with the ruling, but would request the court to reconsider or stay its decision.

That's fueled concern that Micron's legal issues have made it a pawn in the broader trade dispute between China and the U.S. President Donald Trump has railed against Chinese companies for allegedly stealing U.S. companies' intellectual property. We strongly believe that the patents are invalid and that Micron's products do not infringe the patents.

Micron said it had not been served with the injunction and would not comment further until it had reviewed documentation from the Chinese court.

Beijing has made the semiconductor sector a key priority under its "Made in China 2025" strategy, which has shifted up a gear after a US ban on sales to Chinese phone maker ZTE Corp (000063.SZ) underscored China's lack of domestic chips.

The court drama started in December when Micron filed a lawsuit in California under the Defend Trade Secrets Act.

Shares in Micron dropped more than 5% in NY on Tuesday. Micro said it had not received confirmation of the move. Several Chinese government-backed entities have poured billions in research and to buy companies with a trove of chip patents. "Near-term this could favor non-US chipmakers vs".

Micron reiterated its fiscal fourth quarter revenue forecast of $8 billion to $8.4 billion. The patents are not used in Micron's DRAM and NAND technology or products, and UMC and Jinhua rely on distorted interpretations of the patents and improper evidence to support their false allegations that Micron infringes the patents.

The ruling, which was disclosed by UMC and its Chinese partner, slammed shares of Idaho-based Micron, which gets half of its revenue from China.

The US memory chip maker, along with South Korean rivals, SK Hynix, Inc. and Samsung Electronics Co. dominate the Chinese chip market.

The Micron ban could be a major opportunity for other global chipmakers to step in. Intel Corp. fell 0.7%.