By Mike Scarcella

June 9 (Reuters) - Chinese memory chipmaker YMTC has sued Micron Technology MU.O in federal court in Washington, accusing its U.S. rival of spreading false claims that YMTC's chips threaten U.S. national security.

YMTC in a lawsuit filed on Friday said Micron and a public affairs firm called DCI Group “published and widely disseminated a portfolio of falsehoods” suggesting the Chinese tech company installed “spyware” on chips that are used in mobile phones.

“The campaign maliciously and falsely linked YMTC’s standard commercial memory products to military espionage, criminal conduct, and technically impossible malicious capabilities,” YMTC said in its lawsuit, filed by prominent U.S. law firm Quinn Emanuel Urquhart & Sullivan.

YMTC said the company’s founding in China “does not mean that it is a tool of the Communist Party or the Chinese military.”

Idaho-based Micron on Monday declined to comment. DCI, which is based in Washington, did not immediately respond to requests for comment, and neither did attorneys for YMTC.

The complaint said YMTC lost revenue and suffered reputational harm and accused Micron of violating federal false advertising and unfair competition laws.

The Biden administration in 2024 added YMTC to a list created by the Defense Department to highlight firms it says are allegedly working with Beijing's military. YMTC has denied that its technology is for military use.

In the new lawsuit, YMTC accused Micron of funding a website called “China Tech Threat” that is already run by DCI. YMTC said the alleged advocacy “far exceeded permissible bounds.”

The company said it has suffered “the loss of millions of dollars in sales to leading computer and consumer electronics manufacturers in the United States and abroad.”

The lawsuit is seeking what it called “corrective” advertising, unspecified monetary damages and disgorgement of profits from Micron.

YMTC sued Micron in 2023 for alleged patent infringement. Micron filed counterclaims seeking a declaration that it is the rightful owner of the patents at issue in that lawsuit. The litigation there is ongoing.

The case is Yangtze Memory Technologies Inc v. Micron Technology Inc and DCI Group AZ LLC, U.S. District Court for the District of Columbia, No. 1:25-cv-01795.

For YMTC: Robert Schwartz and David Eiseman of Quinn Emanuel Urquhart & Sullivan

For Micron: No appearance yet

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(Reporting by Mike Scarcella)