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China Bans Micron Products From Major Infrastructure Over Security Risks

In its first major action against a U.S. semiconductor group, China said it had banned major infrastructure operators from purchasing products from U.S. chip maker Micron Technology, posing “significant network security risks.” .

The China Cyberspace Administration said on Sunday that the US’s largest memory chip maker “poses significant security risks to China’s critical information infrastructure supply chain.” As a result, it ordered “national critical infrastructure operators” to stop buying products from Idaho-based Micron.

The move follows a seven-week long probe into Micron by the CAC, which was widely seen as retaliation for US efforts to curb China’s access to key technology. Last October, Washington introduced broad chip export controls, followed by the Netherlands and Japan.

Analysts said Micron was clearly the first target for the Chinese government, as its technology could easily be replaced by chips from rivals South Korean rivals Samsung and SK Hynix. The White House last month urged South Korea to urge chipmakers not to close the market gap in China if sales of Micron products were restricted.

China is an important market for Micron.main land China Hong Kong generated 25% of the $30.8 billion in revenue last year, according to people familiar with the matter.

“This could be very bad for Micron. It depends on how broad China’s definition of critical information infrastructure is,” said Paul Triolo, a China technology expert at consultancy Albright Stonebridge. But this could include the financial sector, transportation, energy and data centers.”

He added that data centers are a particularly important customer for Micron’s memory chips.

Chinese government decree harshly denounces China at G7 leaders’ annual world summit in Hiroshima, denouncing China’s human rights record, ‘non-market’ economic policies and growing military claims in East and South China Seas The order was issued the next day.

Micron CEO Sanjay Melotra was part of a delegation of business leaders who attended the G7 summit. He dined with U.S. Ambassador to Japan Rahm Emanuel and Citi Secretary Jane Fraser at a Japanese coastal city on Saturday night.

“Micron has received notice from the CAC of the end of its review of Micron products sold in China,” Micron said in a statement. “We are evaluating our conclusions and evaluating our next steps. We look forward to continuing our discussions with the Chinese authorities,” he said.

China notified Micron of the decision at a meeting in Beijing on Sunday, the people said. After answering questions from regulators in March, Micron did not hear anything from the CAC until it was called to a meeting this weekend, the person said.

“This is new for China,” Triolo said of the Micron ban, adding that Beijing was not “silent” of the U.S. action.

“China welcomes global companies and various platform products to enter the Chinese market as long as they comply with Chinese laws and regulations,” the CAC said in a statement. The regulator’s statement provided no information about the “security risks” that Micron’s products pose.

Analysts have warned that Chinese government regulations could even push Micron out of their supply chains for Chinese companies that do not provide “critical information infrastructure.”

“The blast radius could be even greater,” Triolo said.

https://www.ft.com/content/e6a8e034-cbc2-4267-9b41-b7670db7d130 China Bans Micron Products From Major Infrastructure Over Security Risks

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