China bans US chipmaker Micron from vital infrastructure projects
The Chinese government has told operators of important infrastructure in the country to stop buying products from the US chipmaker Micron Technology.
Its products carry “serious network security risks” that pose hazards to China’s information infrastructure and affect national security, the Cyberspace Administration of China said in a statement on its website.
The move is the latest example of tensions between the US and China over technology, after a US ban on using the social video app TikTok on government phones and restrictions imposed by Washington on the export of some sophisticated computer chips to China.
“Operators of critical information infrastructure in China should stop purchasing products from Micron,” the Chinese agency said on Sunday. A US Department of Commerce spokesperson said the move had “no basis in fact”. The China and Hong Kong market accounts for about 15% of revenues at Micron, and the company’s shares dropped 3.7% in early trading in New York.
The Micron announcement came as Joe Biden told the final day of the G7 summit in Japan that he expected relations with China to improve “very shortly”. The US president said on Sunday that a spat over a “silly balloon” had destabilised the relationship, referring to the shooting down of a Chinese spy balloon off the US east coast in February.
China had announced an official review of Micron under its information security laws on 4 April, hours after Japan joined Washington in imposing restrictions on Chinese access to technology to make processor chips on security grounds.
In Sunday’s statement the Chinese cyberspace agency said: “China firmly promotes high-level opening up to the outside world and, as long as it complies with Chinese laws and regulations, welcomes enterprises and various platform products and services from various countries to enter the Chinese market.”
The decision could affect Micron products in sectors ranging from telecoms to transport and finance, according to China’s broad definition of critical information infrastructure. A Micron executive said the financial cost would run into a single-digit percentage of the company’s revenues.
Mark Murphy, the Micron chief financial officer, said: “We are currently estimating a range of impact in the low single-digit percentage of our company total revenue at the low end, and high single-digit percentage of total company revenue at the high end.”
The chipmaker, which is headquartered in Boise, Idaho, makes products including DRAM chips, flash memory and solid-state hard drives through its Crucial, Ballistix Gaming and SpecTek brands.
It generated $5.2bn (£4.2bn) of revenue from China, including $1.7bn from Hong Kong last year, about 16% of its total revenue, according to Jefferies.
Beijing is pouring billions of dollars into trying to accelerate chip development and reduce the need for foreign technology. Chinese semiconductor manufacturers can supply the low-end chips used in autos and home appliances but not the ones that support smartphones, artificial intelligence and other advanced applications.