June 16, 2024

Beijing on Sunday ordered Chinese companies that handle critical information to stop buying from Micron Technology, a U.S.-based maker of memory chips used in cellphones, computers and other electronics. Many analysts see the move as retaliation for Washington cutting off China’s access to high-end chips.

in its official statement social media China’s Cyberspace Administration of China said on its website that a cybersecurity review had found “serious cybersecurity problems” in the chipmaker’s products. The issues could “seriously jeopardize China’s supply chain for critical information infrastructure” and threaten national security, it said.

China’s actions are the latest blow in a tit-for-tat economic tit-for-tat between Beijing and Washington that is rearranging the fabric of the sprawling global microchip industry. The decision to ban Micron from selling its chips to major companies could have knock-on effects on the Chinese supply chain, as Micron’s Chinese customers seek to replace U.S. memory chips with local or South Korean versions. South Korean chipmakers such as Samsung and SK Hynix are Micron’s competitors and already do a lot of business with China.

Beijing launched a cybersecurity review of Micron in late March as part of what it called “normal regulatory measures.” The announcement comes after Washington rolled out restrictions on China’s semiconductor industry in October. Micron said at the time that it was “fully cooperating” with the investigation and that its China operations were operating normally.

The company said in a statement that it was “assessing the conclusions and assessing our next steps,” adding that it was “continuing discussions with Chinese authorities.”

Since the announcement in March, China has been throwing its weight behind its homegrown chip industry. Beijing has invested billions of dollars in self-reliance, and Chinese companies upstream and downstream in the supply chain have begun replacing Western chips and components.

Chinese authorities have provided few clues about the serious risks they have uncovered. They also provide little information on what companies need to do during cybersecurity reviews.

A Commerce Department spokesman said in a statement that the targeting of Micron, “along with the recent raids and targeting of other U.S. companies, is inconsistent with the People’s Republic of China’s assertion of an open market and commitment to a transparent regulatory framework.” The statement said , the department will respond by “directly engaging” Chinese officials.

But Graham Webster, editor-in-chief of the DigiChina Project at Stanford University’s Cyber ​​Policy Center, said one risk is the possibility of further sanctions from Washington, which could cut off key Chinese companies from Micron’s memory chips.

“Supply chain security includes the risk of foreign governments cutting off supply, which the US government has implemented in a number of ways for other semiconductors,” Mr Webster said. He added that China’s decision could in part be a “risk-mitigating measure to avoid further dependence on supplies that the United States could cut off”.

If Micron can’t sell chips to China, Washington has urged South Korean officials to prevent its chipmaker from filling the gap in the market, Financial Times Report in April.

China approved a cybersecurity law in 2016 that outlines protections for so-called “critical information infrastructurereferring to technology systems in industries such as telecommunications, transportation and defense that Chinese regulators believe would be vulnerable if they malfunctioned or had data leaked.

Micron, based in Boise, Idaho, opened its first factory in China in 2007. In recent years, as Sino-US relations have cooled, Micron has begun to reduce its business scale, reduce the number of Chinese employees and close some factories. operate. As of April, it had about 3,000 employees in Shanghai, Beijing and Shenzhen.

The impact of Sunday’s decision on the company could be considerable. 2022, Micron Report Sales in China were $3.3 billion, about 11% of its global annual sales of $30.8 billion. It was unclear how much of those sales in China would be affected by the government action.

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