China has banned the purchase of memory chips by operators of China’s key infrastructure from Micron Technology. The country claims that they are a serious threat to national security and network security.
The Cyberspace Administration of China’s (CAC) decision comes in the midst of a dispute between Washington and Beijing over chip technology.
The CAC stated: “The review concluded that Micron’s product has serious network security risk, which poses significant security risks for China’s critical infrastructure supply chain. This could affect China’s national safety.”
Micron stated that it has received notice from the CAC of the end of its review on the products the company sells in China. The company “looks forward to engaging in further discussions with Chinese officials”.
The CAC didn’t provide any details about the risks that it found or which Micron products were affected.
The US Department of Commerce stated that the restrictions “have absolutely no basis”. The US Department of Commerce said the restrictions “have no basis in fact”.
We will communicate directly with the Chinese authorities to clarify their actions and explain our position. We will also engage with our key partners and allies to ensure that we are closely coordinated to address the distortions in the memory chip markets caused by China’s action.
This announcement follows a communique issued by G7 leaders on Saturday in Japan, which singled out China for a number of issues, ranging from Taiwan to maritime claims and economic coercion. The leaders decided to create an initiative to combat economic coercion.
Rishi sunak stated at the summit that China was the greatest threat to global prosperity and security. He claimed that China was “the only country with the ability and the will to reshape world order”.
Micron’s revenue in China is about 10%. It’s not clear what impact the decision will have on sales to non Chinese customers in China. China’s definition of critical infrastructure could encompass sectors as diverse as telecoms, transport and finance.
Jefferies analysts expected a minimal impact, as Micron’s biggest customers in China were consumer electronics companies such as computer and smartphone manufacturers.
They stated: “Since Micron DRAM and NAND are less used in servers, most of Micron’s revenue in China does not come from the telcos or government.” The ultimate impact of Micron’s decision will be limited.
Micron produces DRAM and flash memory chips. It competes with South Korea’s Samsung Electronics, SK Hynix as well as Japan’s Kioxia. Shares of SK Hynix as well as Samsung have risen this morning.
China published its review of Micron products at the end of March. At the time, Micron said that it was cooperating and that its business in China was normal.
The US government has banned some Chinese technology products including those made by , the Chinese telecoms giant Huawei. The US government has also restricted the export of US technologies to Chinese companies, including Yangtze Memory Technologies’ rival Micron.
The US President Biden passed a law last year to increase domestic semiconductor research and production in the US, primarily as a counter-measure against China.