When senior Chinese officials hosted dozens of American and European business executives last week at back-to-back annual economic forums, the intended message was clear: China is open for business.
But by the weekend, China’s fearsome regulators were sending an entirely different signal.
Beijing on Friday announced a cybersecurity review of top U.S. chipmaker Micron Technology. The measure, which many industry analysts had anticipated, was China’s most significant retaliation for Washington’s move to cut off China’s access to high-end chips.
China’s Internet Regulator explain It is conducting a review of Micron’s products sold in the country to “safeguard the information infrastructure supply chain”. Chinese foreign ministry spokesman Mao Ning described the review as a “normal regulatory measure” for products that could affect national security.
Micron Technology, headquartered in Boise, Idaho, makes memory chips used in cell phones, computers, data centers, cars and other electronics. It has longstanding ties to China and is a symbol of U.S. leadership in the global semiconductor industry. But now Micron has become caught up in China’s efforts to become self-sufficient in advanced technologies.
Republican Senator Jim Risch of Idaho criticized China’s investigation of Micron, calling it an attempt to undermine the U.S. position in the semiconductor industry.
“This move further helps the American people see China for what it is — an aggressor and bully who has never been interested in a true economic partnership,” Mr. Risch said in a statement.
Micron shares fell nearly 6% following the news. In a statement, Micron said its business in China was operating as normal and was “fully cooperating” with authorities.
Mixed official messages from China reflect that the country’s leaders are walking a tightrope. They are trying to shore up a struggling economy, which only recently reopened after three years of strict pandemic restrictions, while trying to project an unrelenting political image to an increasingly hostile Washington. At a dinner last week for foreign business executives, including Apple Inc.’s Tim Cook, China’s new Premier Li Qiang pledged that China would keep its “door open” getting wider“
“China is not shy about using various tactics to deal with foreign companies,” said Wang Dan, a visiting scholar at Yale Law School and a technology analyst at research firm Longzhou Jingxun. “Sometimes it seems to say: ‘Well, if you don’t Love these carrots and we have a big stick too.’”
China’s decision to scrutinize Micron comes after the U.S. imposed sweeping restrictions on China’s semiconductor industry. The measures, announced in October, target some of Micron’s Chinese competitors.
Micron opened its first factory in China in Xi’an in 2007. The chipmaker has about 3,000 employees across the country in customer service, sales and engineering. It has a chip design center in Shanghai and branch offices in Beijing and Shenzhen.
“We are excited to be a part of the growing technology industry in China,” former Micron chairman Steve Appleton said in a 2007 statement.
But as China’s ambitious plans to become a global technology competitor intensify, Micron is caught at the center of China’s technological rivalry with the United States. In 2018, the U.S. Justice Department began investigating chipmakers in China and Taiwan for allegedly stealing Micron’s trade secrets.one of the companies has plead guiltyAnd another case is still going on.
Over the past two years, Micron has sent “very clear signals” that it intends to reduce its exposure to China, said He Hui, head of China semiconductor research at technology research firm Omdia.
“Micron has always been one of the most sensitive companies to U.S. government policy,” she said, adding that the company had a “relative lack of dependence on China.”
In January 2022, Micron began reducing the number of Chinese employees at its Shanghai chip design center and closing operations. Like many Western chipmakers, Micron has a strong manufacturing presence in Asia, including in Singapore and Taiwan, but it recently announced plans for a $1 billion New York chip factory. President Biden called it “one of the most important investments in American history.”
Mainland China will account for about 11% of its sales by 2022, down from about half five years ago, according to company reports.
In its latest earnings report in March, Micron warned investors that the Chinese government could “restrict our participation in the Chinese market or could prevent us from competing effectively with Chinese companies.” It also highlighted the challenges it faces from state-sponsored Chinese semiconductor rivals. competition risk.
Industry analysts said the action against Micron appeared aimed at sending a message to U.S. technology policymakers while protecting the domestic industry. Chinese investors welcomed the news, sending shares of domestic semiconductor companies higher. Micron’s Chinese customers may hedge their bets by shifting orders to Chinese suppliers, analysts said.
But Samm Sacks, a senior fellow at Yale Law School, said the Micron case had sent a warning message to foreign companies and made Micron’s future uncertain. She called the cybersecurity review process a “black box.”
“Not only is there no known standard for passing it, but if you don’t pass it, there’s no clear end game,” she said. This could have a chilling effect.
“Many companies are now welcoming the coming of Jesus,” Ms. Sachs said. “Is it worth the price to enter this extremely difficult market right now?”
