Micron Technology and China – what’s going on?
On Sunday, China made its first big move against a US chipmaker.
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The backstory: Last October, the US essentially said to China, "No more fancy chips or chipmaking gear for you," slapping a ban on Chinese companies from buying advanced chips and the equipment to make them unless they managed to get a special license (on top of other restrictions). It was a major blow to China's chip ambitions. Then, in March, the Netherlands and Japan joined, putting restrictions on selling chip manufacturing equipment to Chinese companies. That means it became even harder for China to get its hands on the technology it needed to boost its chip industry.
On the same day this all went down, China responded by launching a cybersecurity investigation into Micron, a big player in the US chip game. This was a big deal because Micron gets about 11% of its revenue from sales to China.
More recently: The G7 meeting just wrapped up, with US President Biden saying on Sunday that the G7 members wanted to "de-risk and diversify our relationship with China. That means taking steps to diversify our supply chains." Also, Micron is making big investment moves in Japan to boost chipmaking in the nation.
The development: On Sunday, China made its first big move against a US chipmaker, coming out to say that US chipmaking giant Micron Technology posed "serious network security risks." With this, the company’s products aren’t allowed in key infrastructure projects in China. From there, the US said on Monday that it had “serious concerns” about China's move and it doesn’t make the country appear to be open for business. Also, on Tuesday, a US lawmaker, Representative Mike Gallagher, said that the US Commerce Department should put trade curbs on Chinese memory chip maker Changxin Memory Technologies in response.
Although Micron does get a decent chunk of revenue from its China sales, many experts have pointed out that most of this comes from consumer sales in things like cell phones and personal computers. So, the government and infrastructure ban might not put a huge dent in that, although it could influence Chinese consumers to look into alternatives from South Korea instead.
Key comments:
“A few days ago, the Network Security Review Office conducted a network security review of Micron's products sold in China in accordance with the law. The review found that Micron's products have relatively serious potential network security issues, which pose a major security risk to my country's critical information infrastructure supply chain and affect my country's national security. For this reason, the Network Security Review Office has made a conclusion that the network security review should not be passed. According to the "Network Security Law" and other laws and regulations, operators of critical information infrastructure in China should stop purchasing Micron products,” wrote the Cyberspace Administration of China.
“We firmly oppose restrictions that have no basis in fact. This action, along with recent raids and targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework,” said a statement from the US Department of Commerce.
Micron has "received the CAC's notice following its review of Micron products sold in China. We are evaluating the conclusion and assessing our next steps. We look forward to continuing to engage in discussions with Chinese authorities," said Micron Technology.
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