China bans Micron products from key infrastructure over security risk

China has said US chipmaker Micron Technology’s products pose a “serious network security risk” as it banned key infrastructure operators from buying them, its first major crackdown on a US semiconductor group.

China’s Cyberspace Administration said Sunday that the company, which is the largest US memory chip maker, “poses a significant security risk to China’s critical information infrastructure supply chain.” As a result, it ordered “critical national infrastructure operators” not to buy products from Idaho-based Micron.

The move follows a seven-week investigation into Micron by the CAC, which was widely seen as retaliation by the United States for limiting China’s access to key technologies. Last October, Washington introduced extensive chip export controls, with the Netherlands and Japan following suit.

Micron was an obvious first target for Beijing, analysts said, as its technology would be more easily replaced by rival chips from South Korean rivals Samsung and SK Hynix. Last month, the White House asked South Korea to urge its chipmakers not to fill any niche markets in China if sales of Micron products were restricted.

China is an important market for Micron. Mainland China and Hong Kong generated 25 percent of its $30.8 billion revenue last year, according to a person familiar with the matter.

Paul Triolo, an expert on Chinese technology at consultancy Albright Stonebridge, said: “This could be very bad for Micron. It depends on how broad China’s definition of critical information infrastructure is, but it 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.

The Beijing decree came a day after G7 leaders issued a harsh rebuke to China at the annual meeting of global leaders in Hiroshima, decrying its human rights record, “non-market” economic policies and growing military assertiveness in eastern and southern China. at sea.

Micron CEO Sanjay Mehrotra was part of a delegation of business leaders attending the G7 summit. He dined with Rahm Emanuel, the US ambassador to Japan, and Jane Fraser, the head of Citi, in the Japanese coastal city on Saturday night.

“We have received the CAC’s notice of completion of its review of Micron products sold in China,” Micron said in a statement. “We are evaluating the conclusion and our next steps. We look forward to continuing negotiations with the Chinese authorities.”

China informed Micron of its decision at a meeting in Beijing on Sunday, according to a person familiar with the matter.

“This is new for China,” Triolo said of the Micron ban. “That he does not implement some of the American measures [to curb China’s access to technology] going to bed.”

In a statement, the CAC said that “China welcomes global companies and various platform products in the Chinese market as long as they follow Chinese laws and regulations.” The authority’s announcement did not provide any information about the “security risks” posed by Micron’s products.

Analysts have warned that Beijing’s restrictions could even prompt Chinese companies that do not provide “critical information infrastructure” to try to cut Micron out of their supply chains.

“The blast radius could be much larger,” Triolo said.