INSIGHTS As large-scale AI models advance toward the trillion-parameter era, high-bandwidth memory (HBM) has become a critical bridge between computing performance and data throughput. As the market scales rapidly toward the $100 billion level, a new wave of global patent disputes around HBM is taking shape. Notably, unlike earlier rounds of competition, leading industry players such as SK hynix and Samsung are increasingly leveraging non-practicing entities (NPEs) to pursue enforcement strategies. Against this backdrop, a critical question arises: how can Chinese companies build effective patent risk management and response systems?
1. HBM: The Memory Backbone of AI Computing—A Rapidly Expanding $100 Billion Market
HBM delivers significantly higher bandwidth and lower latency than traditional memory solutions through its vertically stacked architecture, achieving bandwidth several times that of conventional DRAM. This makes it well-suited to the terabyte-scale data throughput requirements of AI training workloads, establishing HBM as an indispensable component in advanced AI chips.
The HBM market is currently characterized by a high level of concentration, with SK hynix, Micron, and Samsung dominating the global supply. Meanwhile, supported by policy initiatives and growing market demand, Chinese companies are accelerating technological breakthroughs, making domestic substitution an increasingly important trend.
The rapid growth in AI computing demand is driving significant expansion in the HBM market:
Beyond AI servers, the proliferation of AI-enabled devices such as smartphones and personal computers is expected to further expand demand. As a result, HBM is emerging as one of the fastest-growing segments in the semiconductor industry, with profound implications for the architecture of global computing infrastructure.
2. Escalating Tensions: From "Giants Clashing" to "Proxy Wars"
As the market expands, competition among industry players has intensified. Patent disputes involving Samsung, SK hynix, and Micron are unfolding across multiple jurisdictions. A notable development is the increasing use of NPEs as enforcement vehicles.
The Independent Enforcer: Netlist
Netlist has been among the most active players in recent memory-related patent litigation. Backed by a substantial patent portfolio built through both internal R&D and strategic acquisitions, the company has initiated multiple infringement actions:
Against Samsung:
Against Micron:
Defensive Offense: SK hynix & Mimir IP
SK hynix has adopted an NPE proxy litigation strategy to pressure competitors, transferring more than 1,500 semiconductor patents to South Korean NPE Mimir IP in May 2024. Shortly afterward, Mimir IP—acting as SK hynix's proxy—filed a lawsuit against Micron in the U.S. District Court for the Eastern District of Texas and initiated a Section 337 investigation with the International Trade Commission (ITC) in June 2024, alleging infringement of six core patents. Tesla, Dell, and other companies using Micron's products were also named as defendants. If successful, the claimed damages could reach $480 million, with SK hynix entitled to a share of any recovery under standard industry arrangements.
Notably, the six core patents asserted in Mimir IP's lawsuit are not related to HBM technology. It remains to be seen whether further action will be taken in the HBM segment.
Offensive and Defensive Synergy: Samsung & IKT
Samsung has adopted a more structured approach by leveraging Intellectual Keystone Technology (IKT), an affiliated entity focused on IP operations. In June 2023, Samsung granted IKT an exclusive license to 96 U.S. patents and transferred 35 Korean patents—including some covering HBM manufacturing processes.
Under this arrangement, IKT is authorized to pursue global enforcement independently, enabling Samsung to enhance enforcement efficiency while maintaining operational separation from its core business.
Preventive Layout: Micron
Micron has also taken early steps by transferring over 400 patents to Lodestar Licensing in March 2023. This move is widely viewed as a preemptive measure to strengthen its position in potential future disputes.
3. Industry Dynamics: Why Are the Giants Turning to NPE Strategies?
The ongoing HBM patent disputes reflect broader competitive dynamics in the memory industry. Leading players are competing not only for market share, but also for technological leadership, using a combination of direct litigation and indirect enforcement through NPEs. Meanwhile, companies such as Netlist continue to act as active independent enforcers, further shaping the competitive landscape.
HBM-related disputes have become a central battleground among the three major memory manufacturers, entrenching the oligopolistic market structure while elevating the strategic importance of patent positioning.
With an estimated 60% share of the HBM market and a leading position in DRAM, SK hynix faces a complex strategic trade-off. While it has strong incentives to assert its patent portfolio, direct litigation against competitors carries significant commercial risks.
A direct lawsuit could trigger immediate counterclaims and potential injunction requests. Given SK hynix's deep integration into global supply chains, any injunction affecting its products could disrupt deliveries to key customers—potentially resulting in customer attrition and revenue decline that could outweigh any litigation gains.
By transferring more than 1,500 patents to Mimir IP and allowing the NPE to initiate enforcement actions, SK hynix effectively insulates its core business operations from litigation risk. This approach reduces exposure to injunction risks while maintaining pressure on competitors.
Meanwhile, this strategy helps preserve relationships with downstream customers by minimizing the likelihood of supply disruptions. In this sense, the use of NPEs serves both defensive and strategic objectives, aligning with the needs of a market leader seeking to protect its position while managing risk.
Samsung's approach reflects a shift toward a more controlled and structured enforcement model. By licensing patents to its affiliated entity, Intellectual Keystone Technology (IKT), Samsung is able to combine the benefits of NPE-style enforcement with a higher degree of internal coordination.
As a dedicated IP management and enforcement platform, IKT enhances enforcement efficiency and reduces operational burdens. Meanwhile, its relative independence creates a degree of separation between enforcement activities and Samsung Electronics' core business operations, mitigating potential supply chain risks.
Unlike SK hynix's reliance on external NPEs, Samsung's model emphasizes control and strategic alignment. Through its equity relationship with IKT, Samsung retains flexibility in deploying patent assets while avoiding potential conflicts of interest that may arise when working with third-party NPEs.
Micron has gained a foothold in NVIDIA's supply chain with its HBM3E products, positioning itself as a key competitor in the next generation of memory technologies. However, its expansion remains constrained by ongoing patent disputes.
The $445 million damages award in its case with Netlist, along with continued legal challenges, highlights the risks associated with patent exposure in this space. In parallel, pressure from NPE-led litigation linked to competitors further complicates its position.
Although Micron has taken steps to strengthen its defensive posture, including transferring patents to Lodestar Licensing, its ability to expand market share may continue to be influenced by the evolving litigation landscape.
Netlist is likely to continue adjusting and expanding its claims in response to both legal developments and technological progress. Its active enforcement strategy has made it one of the most prominent players in the current HBM litigation landscape.
However, the extended duration and substantial cost of patent litigation present ongoing challenges. Sustaining large-scale enforcement efforts may require significant financial resources, potentially pressuring the company to seek additional capital to sustain its long-term enforcement agenda.
A. The Double-Edged Sword of the NPE Proxy Model
As AI-driven demand for computing power accelerates, competition in the HBM sector is increasingly shaped by early patent positioning and deeper ecosystem integration. The growing use of NPEs reflects a shift toward more indirect and strategically flexible forms of competition, and this approach is likely to extend further along the value chain.
In particular, litigation targeting downstream customers may become more common as a means of exerting pressure on competitors.
Key Advantages of the NPE Model:
a) Risk Mitigation: By transferring patents to NPEs, companies can externalize litigation-related risks—including legal costs, adverse judgments, and counterclaim exposure. This structure also reduces exposure to potential product injunctions, helping to protect core supply chains and market positions.
b) Strategic Flexibility: NPE-led enforcement enables companies to constrain competitors' market expansion and product momentum without engaging in direct confrontation.
c) Operational Efficiency and Financial Returns: NPEs specialize in patent monetization and enforcement, often supported by experienced legal teams. This allows operating companies to allocate more resources to core activities such as R&D and capacity expansion, while potentially benefiting from licensing revenues or damages awards.
Key Risks and Challenges:
a) Reduced Control: Delegating enforcement to NPEs may limit a company’s control over litigation strategy, timing, and settlement decisions. NPEs may pursue more aggressive approaches that do not fully align with the company’s broader commercial interests.
b) Strategic Backlash: Widespread use of NPEs may foster a more adversarial industry environment, raising the risk of retaliatory enforcement by competitors.
c) Reputational and Compliance Risks: The relationship between operating companies and NPEs may attract regulatory scrutiny or damage corporate reputation, particularly if perceived as an attempt to circumvent direct accountability. Furthermore, the transfer of core patents to external entities may raise concerns regarding IP security and the risk of unintended or unauthorized exploitation.
4. Strategic Considerations for Chinese Companies
The competitive dynamics among global HBM leaders demonstrate that technological leadership is inextricably linked to patent positioning. Against this backdrop, Chinese companies entering the HBM sector should adopt a combination of proactive and responsive strategies to manage patent risks.
A. Countering NPE "Surprise Attacks": Build Proactive Defenses
NPE litigation is often characterized by its unpredictability and substantial damages exposure. Companies should conduct targeted freedom-to-operate (FTO) analyses aligned with their technological roadmaps, with particular attention to patents recently transferred to NPEs by leading industry players.
Developing design-around strategies can help mitigate infringement risks. In parallel, engaging legal and technical experts with international litigation experience is essential. Where risks are identified, licensing arrangements or negotiated settlements may provide practical solutions.
At the industry level, companies and research institutions may also consider building domestic patent pools to strengthen collective positioning.
B. Countering Direct Manufacturer Attacks: Differentiated Breakthroughs
On the technology front: Companies may initially focus on mid-tier market segments rather than directly competing in the high-end HBM3E/HBM4 space. Leveraging cost advantages and manufacturing capabilities can help establish a foothold while building core technological capabilities.
On the market front: Collaboration with domestic AI chip developers and cloud service providers can support the development of localized supply ecosystems and sustainable demand.
On the patent front: Where infringement risks are identified in products sold within China, companies may consider initiating defensive counterclaims in domestic courts to strengthen their negotiating position.
C. Countering "Covert Attacks": Monitor, Counter, and Coordinate
Companies should closely monitor patent transfers, ownership structures, and litigation activities involving NPEs to better understand the competitive dynamics underlying these enforcement actions. Where appropriate, legal action may be directed not only at NPEs but also at the operating companies behind them.
In addition, closer coordination with downstream customers—such as incorporating IP risk-sharing mechanisms and providing FTO analyses—can help mitigate the impact of potential disputes.
Drawing on models such as Samsung’s IKT structure, companies may also explore partnerships with domestic IP service providers to strengthen their patent monetization and enforcement capabilities while developing more agile response mechanisms.
5. Conclusion
In the AI era, patent strategy is no longer merely a legal consideration—it is becoming a central component of market competition. Companies that can effectively integrate technological development, patent portfolio management, and commercial strategy will be best positioned to navigate the evolving HBM landscape.
For Chinese companies, success will depend not only on technological progress, but also on the capacity to anticipate, adapt to, and counter increasingly sophisticated and indirect forms of patent enforcement.
Author
Ming Wen
Mr. Ming Wen has over 10 years of corporate IP management experience, specializing in IP strategy, patent litigation, and global portfolio management. Formerly the strategic leader of ZTE's IP team, he oversaw nearly 100 domestic and international IP litigations and invalidations. He holds a Master’s in IP Law from Huazhong University of Science and Technology.
Wei Zhao
Ms. Wei Zhao brings over 10 years of IP experience and 7 years of R&D background in optical communications. Formerly with CITIC Group, she specializes in patent layout, risk analysis, and FTO within the optoelectronics, communications, and new energy sectors. She holds a Master’s in Communications and Information Systems
Xiaofeng Jin
Mr. Xiaofeng Jin has 11 years of IP experience, focusing on patent searching, FTO analysis, and invalidation proceedings. His prior experience includes roles at the CNIPA Patent Examination Cooperation Center and ChangXin Memory Technologies. He is a qualified PRC lawyer and Patent Agent, holding a Master of Engineering.
