Beijing on Sunday told Chinese companies that deal with sensitive information to stop buying products from US company Micron Technology, which makes memory chips used in phones, computers and other electronics. Many analysts saw the move as retaliation for Washington’s efforts to cut off China’s access to high-end chips.
In a statement on his official social media The Cyberspace Administration of China said a cybersecurity review found that the chipmaker’s products posed “relatively serious cybersecurity issues.” It said the problems could seriously jeopardize the supply chain of China’s critical information infrastructure and threaten national security.
China’s move is the latest in an economic tit-for-tat between Beijing and Washington that is reshaping the fabric of the sprawling global microchip industry. The decision to bar Micron from selling its chips to key companies could affect China’s supply chains as Micron’s Chinese customers look to replace American memory chips with domestic or Korean versions. South Korean chipmakers Samsung and SK Hanks are Micron’s rivals and already do significant business with China.
Beijing launched a Cyber Security Review Micron in late March as part of what it called a “general regulatory initiative.” The announcement comes after Washington imposed sanctions against China’s semiconductor industry in October. Micron said at the time that it was “fully cooperating” with the investigation and that its China business was operating as normal.
In a statement, the company said it was “reviewing the outcome and assessing our next steps,” adding that it was “continuing to communicate with Chinese authorities.”
Since that announcement in March, China has been engaged in a All-out campaign to boost their native chip industry. Beijing has spent billions of dollars on self-reliance efforts, and Chinese companies have moved up and down the supply chain to replace Western chips and components.
Chinese officials have offered few indications of what they have discovered that pose serious risks. They also provide little information on what companies need to do when conducting a cybersecurity assessment.
In a statement, a U.S. Commerce Department spokesman said the action against Micron, “along with recent raids and targeting other U.S. firms, is inconsistent with the People’s Republic of China’s assertion that it is opening its markets and a Committed to a transparent regulatory framework.” The statement said the department would “engage directly” with Chinese authorities in response.
But Graham Webster, editor-in-chief of the DigiChina Project at the Stanford University Cyber Policy Center, said risks include the possibility of more sanctions from Washington that could cut off key Chinese companies from Micron’s memory chips.
“Supply chain security involves the risk of cutting off a foreign government’s supply, which the US government has done in a number of ways for other semiconductors,” Mr Webster said. He added that China’s decision may be partly “a cynical move to avoid further dependence on supplies from the United States.”
Washington has urged South Korean officials to prevent its chipmakers from filling a market void if Micron fails to sell its chips to China, the Financial Times reported. Reported in April.
China approved. Cyber Security Law in 2016 which outlined rules to protect what it called “Important information infrastructure“which refers to technology systems in sectors including telecommunications, transportation and defense that Chinese regulators believe would be at risk if they corrupt or leak data.
Micron, based in Boise, Idaho, built its first factory in China in 2007. As relations between the U.S. and China have cooled in recent years, it has begun scaling back its operations, reducing the number of Chinese staff and closing some. Operations As of April, it had approximately 3,000 employees in Shanghai, Beijing and Shenzhen.
The impact of Sunday’s decision on the company could be huge. In 2022, Micron Reported Sales in China totaled $3.3 billion, about 11 percent of its annual $30.8 billion in global sales. It was unclear how much the government’s action would affect their sales in China.