China says products from US memory chip giant Micron Technology pose a national security risk.
The country’s cyberspace regulator announced Sunday that America’s largest memory chip maker poses “serious risks to network security.”
This means the company’s products will be banned from key infrastructure projects in the world’s second largest economy.
It’s China’s first major move against a US chipmaker as tensions rise between Beijing and Washington.
The announcement is the latest development in a deepening dispute between the US and China over the technology critical to economies around the world.
The long-running dispute has resulted in Washington imposing a series of measures on Beijing’s chip industry and investing billions of dollars to boost America’s semiconductor sector.
In a statement, the Cyberspace Administration of China (CAC) said, “The review found that Micron’s products have serious network security risks that pose significant security risks to China’s critical information infrastructure supply chain and affect China’s national security.”
The CAC did not disclose the risks it thought it had identified or in which Micron products it had identified them.
A Micron spokesman confirmed to the BBC that the company “received the notification from the CAC after reviewing Micron products sold in China.”
“We are evaluating the conclusion and evaluating our next steps. We look forward to continuing discussions with the Chinese authorities,” they added.
In response, the US government said it would work with allies to counter “China’s actions distorting the memory chip market.”
“We firmly oppose restrictions that are unfounded,” said a spokesman for the US Department of Commerce.
“This action, as well as the recent raids and attacks on other American companies, are contradictory [China’s] affirms that it is opening its markets and committed to a transparent regulatory framework.”
Micron’s share price plummeted 5.3% in U.S. premarket trading.
Analysts at investment banking group Jefferies said, “The ultimate ramifications.” [of the ban] on Micron will be “very limited” since the company does not rely on the Chinese government or telecoms for the majority of its sales generated in the country.
Micron’s chip customers in China are primarily focused on smartphones and personal computers.
However, CJ Muse, an analyst at Evercore ISI, said there is a risk Micron customers in China could switch from the company to its competitors Samsung and SK Hynix, both of which are based in South Korea.
“The US, meanwhile, has urged South Korea not to make up any deficits it may have with China,” he said.
China is a key market for Micron, generating around 10% of its full-year sales. In 2022, Micron reported total sales of US$30.7 billion (£24.6 billion), of which US$3.3 billion came from mainland China.
It also has manufacturing facilities in the country.
The CAC’s announcement came a day after a joint statement was issued at a meeting of G7 leaders in Japan criticizing China, including the use of “economic coercion”.
On Sunday, US President Joe Biden said the G7 wanted to “de-risk and diversify our relationship with China.”
“That means taking steps to diversify our supply chains,” he added.
Micron CEO Sanjay Mehrotra attended the Hiroshima summit as part of a group of business leaders.
Last week, the company said it would invest around 500 billion yen ($3.6 billion; £2.9 billion) in technology development in Japan.
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