China has banned some sales of Micron products after it launched an investigation into the US memory chip giant for cybersecurity risks in early April.
The decision is widely seen as part of the US-China battle that is rocking a deeply intertwined global technology supply chain.
Last year the US added Chinese state-backed memory chipmaker Yangtze Memory Technologies Corporation on the entity list, preventing US companies from supplying it without approval. The US has also restricted Nvidia from exporting H100, its state-of-the-art GPU for generative AI trainingto China.
China’s Cyberspace Administration on Sunday told domestic companies providing “key information infrastructure” to stop buying from Micron. Micron products “have serious cybersecurity vulnerabilities and pose a high risk to the nation’s key information supply chains, raising cybersecurity concerns.”
Micron, which opened its first factory in China 16 years ago, specializes in producing computer memory and data storage, such as dynamic random access memory, known as DRAM, and flash memory. China is the third largest market, accounting for 10.7% of its annual sales in 2022. We have reached out to Micron for comment.
“Key information infrastructure” such as China defines it includes telecommunications, energy, transportation, finance, defense, and any other area pertaining to national interests.
The authority did not specify in what ways Micron poses a cybersecurity risk, but did mention it Chinese cybersecurity law which came into effect in 2016, a comprehensive scheme to strengthen government oversight of the Internet, with rules such as real-name verification and the storage of local user data on local servers.
Micron anticipated the challenges in China in its 2022 annual report.
In particular, we face the threat of increased competition due to significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), which is intended to advance China’s stated national policy goals. In addition, the Chinese government may restrict our participation in the Chinese market or prevent us from competing effectively with Chinese companies.
The ban could benefit Micron’s competitors in China, South Korean giants Samsung Electronics and SK Hynix. But the US also urged South Korea not to fill the gap in China’s memory chip market if Micron is banned. according to the Financieele Dagblad.
In response to the ban, the United States Department of Commerce said it will “engage directly with Chinese authorities to detail the U.S. position and will work with key allies and partners to address what it calls memory chip market disruptions resulting from China’s actions.”
In recent years, China has worked to strengthen its technological independence in key industries such as advanced semiconductors, which have historically relied on foreign suppliers. For example, there is one push to replace foreign hardware and software with domestic alternatives in state-owned enterprises.
