In a move intensifying the ongoing tech dispute between the United States and China, China’s cyberspace regulator, the Cyberspace Administration of China (CAC), on Sunday, announced a ban on products made by U.S. memory chipmaker Micron Technology Inc. The decision follows the conclusion of a network security review conducted by the CAC, which found serious security risks associated with Micron’s products. While the details of these risks remain undisclosed, Reuters reports that the ban encompasses key infrastructure operators in sectors such as telecoms, transport, and finance, according to China’s broad definition of critical information infrastructure.
In its statement, the CAC emphasized the potential impact of Micron’s products on China’s critical information infrastructure supply chain and national security. Upon receiving the CAC’s notice, Micron expressed its willingness to engage in further discussions with Chinese authorities.
Industry analysts from Jefferies anticipate a limited impact on Micron as the company’s major customers in China primarily consist of consumer electronics firms rather than infrastructure suppliers. They note that Micron’s revenue in China is not heavily reliant on telcos and government sectors, indicating a potentially minimal overall impact on the company’s operations.
Micron Ban and the G7 Connection
Micron, known for manufacturing dynamic random-access memory (DRAM) and NAND flash memory chips, competes with major players such as South Korea’s Samsung Electronics Co Ltd, SK Hynix Inc, and Japan’s Kioxia, a unit of Toshiba Corp. The timing of China’s announcement during the Group of Seven (G7) summit in Japan has raised eyebrows, with experts suggesting a potential retaliatory motive against a major U.S. chipmaker. Christopher Miller, a professor at Tufts University and author of ‘Chip War: The Fight For The World’s Most Critical Technology,’ asserts that the timing is not coincidental, highlighting the geopolitical implications surrounding the G7 summit.
During the G7 summit, U.S. President Joe Biden stated that G7 nations had agreed to “de-risk and diversify” their relationship with China. The leaders also announced the establishment of an initiative to counter economic coercion. Analysts view this ban on Micron as an early test of the G7’s efforts and their commitment to addressing the escalating tensions between the two global powers.
China had initially announced its review of Micron’s products in late March, and at the time, Micron stated its cooperation and confirmed that its business operations in China remained normal. In response to the U.S.-China dispute, the U.S. government has imposed export controls on chipmaking technology to China and taken steps to prevent Micron’s rival, Yangtze Memory Technologies, from purchasing certain American components.
Micron currently derives approximately 10 percent of its revenue from China. However, whether the ban will affect the company’s sales to Non-Chinese customers within the country remains unclear. Last year, Micron generated $5.2 billion in revenue from China and Hong Kong, accounting for about 16 percent of its total revenue, according to Jefferies.
Analysts point out that a significant portion of Micron’s products flowing into China are purchased by Non-Chinese firms for use in products manufactured in the country. China’s September 2021 implementation of rules aimed at protecting critical information infrastructure has compelled operators to comply with stricter requirements, particularly in areas such as data security.
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