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Monday, April 22, 2024

China Implements Ban on Certain U.S. Company Micron Chip Sales

Micron Technology, a U.S. producer of memory chips used in phones, laptops, and other gadgets, came under fire from Beijing on Sunday, when the Chinese government ordered enterprises handling sensitive information to cease buying its goods. Many experts saw this as Beijing’s way of striking back at Washington for its attempts to limit China’s access to high-end processors.

According to a statement posted on the Cyberspace Administration of China’s official social media site, the organisation conducted an examination of the chip manufacturer’s cybersecurity practises and determined that its goods had “relatively serious cybersecurity problems.” It warned that the issues might “seriously endanger the supply chain of China’s critical information infrastructure” and put the country at risk.

China’s move is the most recent exchange in a tug-of-war for the global microprocessor sector between Beijing and Washington. Repercussions for China’s supply chains may result from the decision to prevent Micron from selling its chips to critical firms, as Micron’s Chinese clients may want to switch from U.S. memory chips to Chinese or Korean alternatives. Micron’s rivals in the semiconductor industry in China include companies like Samsung and SK Hynix, both of which are based in South Korea.

In late March, Beijing launched a probe of Micron’s cybersecurity as a “normal regulatory measure.” The move was made after the United States government imposed new curbs on China’s semiconductor sector in October. At the time, Micron said it was “cooperating fully” with the probe and that business in China continued as usual.

China has been going all effort to strengthen its domestic semiconductor sector since the declaration in March. Chinese firms all the way down the supply chain have been working to replace Western chips and components, despite Beijing spending billions of dollars on self-reliance measures.

Chinese officials were vague about the nature of the potentially dangerous discovery they had made. Furthermore, they have not been forthcoming with details on what is expected of businesses during a cyber audit.

U.S. Commerce Department spokesperson: “along with recent raids and targeting of other American firms, this action against Micron is inconsistent with the People’s Republic of China’s assertions that it is opening its markets and committed to a transparent regulatory framework.” The statement promised to “engage directly” with Chinese authorities in response.

The principal editor of the DigiChina Project at Stanford University’s Cyber Policy Centre, Graham Webster, warned that more penalties from the United States might leave key Chinese enterprises without access to Micron’s memory chips.

The Financial Times claimed in April that Washington had encouraged South Korean authorities to stop its chip producers from filling the market hole if Micron was unable to sell its chips to China.

The Chinese government approved a cybersecurity law in 2016 that outlined rules to protect the country’s “critical information infrastructure,” which includes the country’s telecommunications, transportation, and defence systems.

Micron, headquartered in Boise, Idaho, established its first Chinese manufacturing facility in 2007. It has began to scale down its activities in recent years, decreasing the number of Chinese employees and closing certain facilities as relations between the United States and China have deteriorated. In April, it was estimated that the company had 3,000 workers across Shanghai, Beijing, and Shenzhen.

The judgement made on Sunday may have far-reaching consequences for the business. Micron’s sales in China were $3.3 billion in 2022, accounting for around 11% of the company’s total $30.8 billion in sales that year. The extent to which the government’s intervention will effect sales in China was not known.

David Faber
David Faber
I am a Business Journalist of The National Era
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