China Bans Sale of US Micron Chips Alleging National Security Risk

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  • China’s cybersecurity watchdog said that Micron’s products posed security risks to China’s critical information infrastructure supply chain and national security
  • The sale of Micron products in China contributed to nearly 11% of the company’s total revenue of $30.8 billion in 2022.
  • The ban propelled a rally in Hong Kong tech stocks after witnessing a two-month low.

The technology war between China and the US has reached a new level with China banning the sale of US chipmaker Micron Technology’s products. Beijing claimed that the US memory chip manufacturer posed a ‘national security risk’, a statement refuted by the US Commerce Department as having ‘no basis in fact’.

The Cyber Security Review Office under the Cyberspace Administration of China (CAC) announced an investigation into Micron products in late March. It issued a statement on Sunday saying that Micron’s products had “severe cybersecurity risks, posing significant security risks to China’s critical information infrastructure supply chain and to our national security”. The reviewer did not disclose the products it reviewed or the methods it used to review them.

Assessing the impact of the blow

The sale of Micron’s DRAM, NAND flash memory and solid state drives, in China, contributed to nearly 11% of the company’s total revenue of $30.8 billion in 2022, with its major customers being computers and smartphone makers.

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Analysts who spoke to Reuters said that “Since Micron’s DRAM and NAND products are much less in servers, we believe most of its revenue in China is not generated from telcos and the government. Therefore, the ultimate impact on Micron will be quite limited.”

The South China Morning Post reported that Chinese clients were likely to shift their orders to South Korean firms such as Samsung Electronics and SK Hynix and Chinese domestic memory chipmakers, including DRAM from Changxin Memory Technology Corp (CXMT) and NAND from Yangtze Memory Technologies Corp (YMTC).

Meanwhile, the Micron ban propelled a rally in Hong Kong tech stocks after witnessing a two-month low.

Micron had earlier announced its plans to invest up to $3.7 billion (500 billion yen) in extreme ultraviolet (EUV) technology over the next few years in Japan, which is currently hosting the Group of Seven (G7) Summit. President Joe Biden had earlier urged the G7 leaders to “de-risk and diversify our relationship with China.” The leaders had agreed to establish an initiative to counter economic “coercion.”


 

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