China Bans Major Chip Maker Over National Security Concerns

China's cyberspace regulator has declared that products made by Micron Technology, the largest memory chip maker in the US, pose "serious network security risks" and will be banned from key infrastructure projects in the country. This move marks China's first major action against a US chip maker, reflecting the increasing tensions between Beijing and Washington. The announcement is the latest development in an ongoing dispute between the US and China over crucial technology that drives economies worldwide.

The dispute has seen the US implementing a series of measures against China's chip manufacturing industry while investing billions of dollars to bolster its own semiconductor sector. In response, the Cyberspace Administration of China (CAC) stated that Micron's products have significant security risks that could impact China's critical information infrastructure supply chain, thereby jeopardizing national security. The CAC did not provide specific details about the identified risks or the Micron products affected.

Micron confirmed that it received the notice from the CAC and stated that it is evaluating the conclusion and considering its next steps. The US government expressed its opposition to restrictions without factual basis and stated that it would collaborate with allies to address the distortions caused by China's actions in the memory chip market.

While Micron's stock price experienced a 5.3% drop in pre-market trading in the US, analysts believe that the ban's impact on the company will likely be limited. Micron's sales in China are mostly concentrated in smartphones and personal computers, and it does not heavily rely on the Chinese government or telecommunications for its sales. However, there is a potential risk of customers in China shifting to competitors like Samsung and SK Hynix, based in South Korea.

China is a significant market for Micron, accounting for approximately 10% of its annual sales. The company also operates manufacturing facilities in the country. The CAC's announcement came shortly after the G7 leaders' meeting in Japan, where a joint statement criticized China for its economic coercion. US President Joe Biden emphasized the need to diversify supply chains and de-risk the relationship with China during the G7 summit.

Micron's CEO, Sanjay Mehrotra, attended the summit alongside other business leaders. In a separate development, Micron recently announced a $3.6 billion investment to develop technology in Japan. The escalating tensions between the US and China continue to have far-reaching implications for the global technology industry.