China says that the memory chips produced by the American company Micron Technology are a threat to China's national security. The country's cyberspace regulator announced on Sunday that China's security network was exposed to threats from Micron's memory chips. This means that the firm's products will be blocked from major infrastructure projects. It is China's first major move against a US chipmaker since tensions between Beijing and Washington escalated.
We are reviewing the results and evaluating our next steps. We look forward to continuing discussions with the Chinese authorities. The US government has said it will work with its allies to address disruptions in the memory chip market caused by China's actions. "We strongly oppose these sanctions, which have no basis in fact," said a spokesperson for the US Department of Commerce. He said the move, along with recent raids and targeting of other US companies, is inconsistent with China's claims that it is opening its markets and is committed to a transparent regulatory framework. Micron shares fell 5.3% in premarket trading in the US.
On Sunday, US President Joe Biden said that the G7 countries want to de-risk and diversify their relationship with China. He added, “This means we take steps to diversify our supply chain. Micron Chief Executive Sanjay Mehrotra attended the summit as part of a group of business leaders in Hiroshima. Last week, the company said it would invest about $3.6 billion to develop the technology in Japan.
China is an important market for Micron and generates about 10% of its full-year sales. Micron's total revenue in 2022 is $30.7 billion, of which $3.3 billion comes from China. The CAC announcement came a day after the G7 leaders' meeting in Japan issued a joint statement criticizing China, including the use of 'economic coercion'.
"The ultimate impact [of the ban] on Micron will be quite limited" because it does not rely on the Chinese government or telecommunications for the majority of sales generated in the country, said analysts at investment banking group Jefferies. Micron's chip customers in China are mostly focused on smartphones and personal computers. However, Evercore ISI analyst CJ Muse says there is a risk that Micron's customers in China could shift away from the firm to rivals Samsung and SK Hynex, both of which are in South Korea. I live in
As a result of the long-running dispute, Washington has taken a number of measures against Beijing's chip-making industry and invested billions of dollars to boost the US semiconductor sector. The Cyberspace Administration of China (CAC) said in a statement: "The review found that Micron's products have serious network security risks, which pose significant security risks to China's critical information infrastructure, leading to China's national security is affected. CAC did not provide details of the risks it said it had found in which Micron products. A Micron spokesperson confirmed to the BBC that the company 'received the CAC notice following a review of Micron products sold in China.'