A Supreme Court injunction against Infineon Technologies has led to a significant increase in domestic semiconductor stocks in China.

A Chinese ban on German chip giant Infineon Technologies selling gallium nitride (GaN) products in mainland China triggered a spike in domestic semiconductor stocks on Monday, as the landmark patent dispute was expected to reshape the country’s “third-generation” chip sector. A decision by China’s Supreme People’s Court on Friday upheld a lower court’s injunction issued against the German company in May, according to a statement released by domestic rival Innoscience. The lower court found that....