China has accused Micron Technology, the leading US memory chip giant, of being a national security threat due to “serious network security risks” associated with its products. The country’s cyberspace regulator, the Cyberspace Administration of China (CAC), announced the ban on Micron’s products from being used in critical infrastructure projects within China. This move signifies China’s first major action against a US chip maker and reflects the deepening conflict between Beijing and Washington over crucial technology. The dispute has witnessed the US imposing several measures on China’s chip manufacturing industry and investing heavily in its own semiconductor sector.
The CAC stated that Micron’s products pose significant security risks to China’s critical information infrastructure supply chain, thereby affecting national security. However, specific details about the identified risks or the Micron products implicated were not disclosed by the CAC.
Micron confirmed that it had received the notice from the CAC and expressed its intention to assess the conclusion and determine the subsequent steps. The company also affirmed its willingness to engage in discussions with Chinese authorities. Meanwhile, the US government responded by declaring its intention to collaborate with allies to address the alleged distortions caused by China’s actions in the memory chip market. It firmly opposed restrictions lacking factual basis and criticized China for contradictory claims of market openness and a transparent regulatory framework.
The news led to a 5.3% decline in Micron’s share price during pre-market trading in the US. Nevertheless, analysts from investment banking group Jefferies believed that the ban’s impact on Micron would be relatively limited since the company does not heavily rely on the Chinese government or telecommunications for the majority of its sales in China. Micron’s customers in China are predominantly concentrated in the smartphone and personal computer sectors.
However, analysts warned that there could be a risk of Micron’s Chinese customers shifting to its competitors, such as Samsung and SK Hynix, both based in South Korea. The US has reportedly urged South Korea not to fill any potential supply gaps created by China’s actions. China is an important market for Micron, accounting for approximately 10% of its full-year sales. In 2022, Micron reported a total revenue of $30.7 billion, with $3.3 billion coming from mainland China. Additionally, Micron has manufacturing facilities in China.
The CAC’s announcement followed a joint statement from the G7 leaders, issued during their meeting in Japan, which criticized China, including its employment of “economic coercion.” US President Joe Biden mentioned that G7 nations were exploring ways to diversify and reduce risks in their relationship with China, emphasizing the need to diversify supply chains.
Notably, Micron’s CEO, Sanjay Mehrotra, participated in the G7 summit in Hiroshima as part of a group of business leaders. Last week, Micron announced a substantial investment of around 500 billion yen ($3.6 billion) in technology development in Japan.