The cyberspace administration of China announced on Sunday that chips made by Micron Technology Inc have failed its security evaluation. It has banned operators of key infrastructure from using Micro products.
The decision was made following a seven week investigation by the CAC into Micron. Many saw the investigation as a retaliation against the chip dispute between Washington and Beijing. It all started when Washington introduced chip export controls in October 2022 to prevent its rival, Yangtze Memory Technologies from buying American parts. The ban can affect a number of sectors in the country such as telecoms, finance and even transport.
The US commerce department replied that it strongly opposed the ban as there was no truth. It further continued that it will seek out a solution by working closely with China and key allies.
China has not provided details on the security flaws or risks it found on Micron products. There was also no information on what was required from Micron, in the announcement.
Analysts say Micron an obvious target
Experts have mentioned that Micron was an obvious target for Beijing as its products can be easily replaced by South Korean companies like Samsung and SK Hynix. The White House foresaw this and requested South Korean chip makers to not fill the market gap if a ban was made on Micron products last month.
The announcement saw an increase in the shares of SK Hynix and Samsung by 1% and 0.5% early on Monday morning.
One of Micron’s biggest markets is China. Together with Hong Kong, the two countries make up 25% of the firm’s revenue last year. The majority of its products imported to China are being used by non-Chinese firms in smartphone and computer manufacturers, thereby not causing much impact to the company.
China’s Decision is critical amid the G7 talks
The CAC’s decision to ban Micron products comes at an important time. The ongoing Group of Seven or G7 summit in Japan had leaders criticizing China’s human rights issues, economic policies and increasing military presence in the South and East China Seas.
Joe Biden on Sunday mentioned that the G7 nations have mutually agreed to de-risk and evaluate their relationship with China. They will also put into action, counters measures against the economic ‘coercion’.
In the same meeting, China informed Micron about the ban. There was no separate communication from the CAC to Micron since responding to it in March.
China ramped up its efforts to protect its information infrastructure by imposing stricter controls for better data security in September 2021. The announcement to test and review Micron’s products made by China in March. At the time, authorities mentioned that the company was cooperating with their review efforts. It prompted the start of a country-wide campaign to use homegrown chips. While Beijing spent billions of dollars to be more self-reliant, companies in China have started replacing their American components.
Micron, from Idaho USA, built its first factory in 2007 in China. When the recent issues between the nations cropped up, it reduced its operations and began downsizing. In April, only 3,000 employees were working in Beijing and Shenzhen.
