In the latest escalation of the US-China tech clash, China announced bars on Micron chips after the company’s products failed a cybersecurity review. The Cyberspace Administration of China (CAC) cited significant security risks to national security and the critical information infrastructure supply chain as the reasons behind the ban.
This move comes after China initiated an investigation into imports from the largest US memory chip maker. The tech sector has become a battleground for national security concerns between the two economies, with the US already imposing restrictions on Chinese tech firms. In response, the US Commerce Department dismissed Beijing’s claims as baseless and vowed to limit disruptions with allies.
Retaliation and Uncertainty Extend Beyond Micron to Other US Chipmakers
Holden Triplett, founder of Trenchcoat Advisors and a former FBI counterintelligence official, characterized China’s actions as political retaliation against the US’s export controls on semiconductors. The repercussions of this development extend beyond Micron, casting uncertainty over other US chipmakers that sell to China, the world’s largest semiconductor market. Companies such as Qualcomm, Broadcom, and Intel supply billions of chips to China, integrating them into electronic products that are shipped worldwide.
The Investigation’s Focus and Micron’s Response
While the Chinese cyber agency did not specify the security risks or identify specific Micron products that are now barred, it emphasized that conducting the investigation was a necessary measure to safeguard national security. Meanwhile, Micron stated that it is evaluating the review’s conclusion and engaging in discussions with Chinese authorities. Furthermore, analysts predict a limited impact on Micron as the ban appears to focus on critical information infrastructure rather than consumer electronics.
Adding to Existing Tensions in the Memory Chip Industry
This announcement adds to the existing tensions between the US and China regarding memory chips. In the past, the US boycotted Yangtze Memory Technologies Co., limiting China’s ability to manufacture advanced 3D Nand-style chips. Micron, the last remaining US-based computer memory maker, could potentially face challenges if buyers in China opt for rival products, such as Samsung and Hynix. The potential diversion of business away from Micron could harm customer relationships and impact the company’s revenue.
Lawmakers Condemn China’s Actions, Posing a Dilemma for Businesses
Lawmakers have condemned China’s bars on Micron chips, stating that the ruling Communist Party is making it increasingly difficult to do business in the country. Consequently, the situation poses a dilemma for businesses considering investments in either China or the US and its allies. Furthermore, some believe that China’s actions are pushing American businesses to reinvest in the US. Therefore, the semiconductor industry and international business relationships will need to closely observe the full impact of the China bars on Micron chips and its ramifications.
Source: bloomberglaw.com
