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What just happened? China has banned the operators of critical information infrastructure from purchasing chips made by Micron. Beijing claims the move, which has seen China’s chip stocks rally, came after the US memory giant failed its network security review.
According to China’s Cyberspace Administration (CAC), a network security review of Micron’s products showed they have relatively serious potential network security issues that pose major security risks to China’s critical infrastructure supply chain, which includes state-owned banks, transportation, and telecoms.
CAC added that the security issues in Micron products affects China’s national security. Its statement ended with a message stating that companies from all countries were welcome in the Asian nation as long as they abide by China’s laws and regulations. The CAC never gave any details on what security risks it found in Micron products or which items would be affected.
Machine-translated copy of CAC statement
Idaho-based Micron is the United States’ largest memory manufacturer. Around 25% of its sales came from China last year, but the impact of the ban is expected to be minimal as most of its customers in the country make devices such as smartphones and PCs for companies around the world. Moreover, the Wall Street Journal writes that the ban does not apply to non-Chinese firms operating in China.
Micron said it had received the CAC’s notice of the conclusion of the review, and that it looks “forward to continuing to engage in discussions with Chinese authorities.”
Many believe that when China announced it was conducting a review of Micron imports in March, it was retaliation for the increasing number of chip-related sanctions the US has placed on the country.
Washington has also encouraged The Netherlands and Japan to tighten their export controls on chipmaking equipment to China. Beijing complained to the World Trade Organization about the Japan/Netherlands agreements last month, complaining that it may have violated “the principle of openness and transparency.” There’s also the US CHIPS Act, which has been a point of contention for China for a while now.
Responding to the CAC’s announcement, US Commerce Secretary Gina Raimondo told the Wall Street Journal, “We firmly oppose restrictions that have no basis in fact.” The statement added that the Commerce Department would engage directly with Chinese authorities to detail the US position.
NEWS: @GinaRaimondo issues US response to China’s action against Micron – reading between the lines, the US will have to convince S. Korean chip companies to forgo big profits and resist backfilling China’s self-created supply problem. pic.twitter.com/w2t9mcc2jE
– Annie Linskey (@AnnieLinskey) May 22, 2023
Raimondo added that the US would engage key allies to address Beijing’s actions. The Commerce secretary also warned that the ban would lead to distortions in the memory chip market. The US has reportedly urged South Korean chipmakers not to fill the hole left by Micron’s ban.
Shares in Chinese chip companies rose on the back of the news earlier today, as did those of South Korean firms SK Hynix and Samsung Electronics.
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