China bans chipmaker Micron from key infrastructure projects as tech row with US escalates

Beijing has stepped up its feud with Washington after announcing products made by US memory chip giant Micron Technology pose a national security risk.

China‘s cyberspace regulator said on Sunday that following a review it found Micron products have unspecified “serious network security risks” that are a hazard to the country’s information infrastructure.

It told users of computer equipment to stop buying products from the US company.

“The review found that Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security,” the Cyberspace Administration of China said on its website.

CAC’s statement did not provide further details of the risk or which Micron products were deemed a threat.

Micron said it had received the CAC’s notice of the conclusion of its review of the company’s products sold in China, and looked “forward to continuing to engage in discussions with Chinese authorities”.

The US, Europe and Japan are reducing China’s access to advanced chipmaking and other technology they believe could be used in weapons.

While they have warned of unspecified consequences, Chinese officials appear to be struggling to find ways to retaliate without hurting the country’s own smartphone producers and other industries.

Micron makes DRAM and NAND flash memory chips and competes with South Korea’s Samsung Electronics Co Ltd and SK Hynix Inc, as well as Japan’s Kioxia, a unit of Toshiba Corp.

Impact on Micron will be ‘limited’

The company would experience limited impact by the latest announcement, according to Jefferies analysts, as its major customers in China are consumer electronics firms such as smartphone and computer manufacturers, not infrastructure suppliers.

“Since Micron’s DRAM and NAND products are much less in servers, we believe most of its revenue in China is not generated from telcos and the government. Therefore, the ultimate impact on Micron will be quite limited,” they said.

However, the company generated $5.2bn (£4.1bn) of revenue from China and Hong Kong last year, around 16% of its total revenue.

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An official review of Micron under China’s increasingly stringent information security laws was announced last month, hours after Japan joined Washington in imposing restrictions on Chinese access to technology to make processor chips on security grounds.

Last week, Micron announced a plan to invest up to 500 billion yen (£2.9bn) in Japan in extreme ultraviolet technology, becoming the first chipmaker to bring advanced chip manufacturing technology to the country that is now seeking to reinvigorate its chip sector.

The timing of the CAC’s announcement was significant, as US President Joe Biden said on Sunday that G7 nations had agreed to “de-risk and diversify our relationship with China”. They also agreed to establish an initiative to counter economic “coercion” during the summit in Hiroshima, Japan, over the weekend.

Meanwhile, British Prime Minister Rishi Sunak said in his address at the summit that China poses the biggest challenge in the world to global security.

He said China was the “only country with both the means and intent to reshape the world order”.