Beijing Bans Chinese Companies From Using Chips From US Factory

The Cyberspace Administration of China has banned Chinese firms from purchasing chips from U.S. memory manufacturer Micron Technology.

China’s cybersecurity regulator announced on Sunday it had found that Micron’s products pose “significant security risks” to critical information infrastructure in the communist country, including state-owned banks and telecom operators.

In late March, China initiated a review of Micron Technology imports — which many claimed was simply retaliation for sanctions imposed on Chinese chipmakers by the U.S. in recent years.

The ban came as a result of that review and may cause a problem for Micron. While the Idaho-based company is the largest memory manufacturer in the U.S., the Chinese market makes up an estimated 10% of its annual revenue.

However, the majority of China-based manufacturing companies importing Micron products are using them in devices that will be sold in other parts of the world — which will not be affected by the ban.

According to the Wall Street Journal, the Cyberspace Administration of China’s ban does not apply to firms in China that are not Chinese-owned.

Micron responded to the ban in a statement to the Wall Street Journal.

“We are evaluating the conclusion and assessing our next steps,” Micron told the outlet. “We look forward to continuing to engage in discussions with Chinese authorities.”

Thus far, China has not specified which Micron products would be affected by the ban, nor have they provided any details about their security concerns.

According to the Wall Street Journal, the Chinese Communist Party has been looking for ways to retaliate against the U.S. in their ongoing feud over semiconductor technology. The latest escalation in the feud came earlier this year when the Biden administration moved to restrict China’s access to advanced chipmaking equipment. In January, officials from the U.S., the Netherlands, and Japan agreed to tighten export controls for lithography machines from companies including ASL, Nikon, and Tokyo Electron.

China likely chose banning Micron chips because they were an easy target, as Chinese companies can simply switch to other suppliers in the region, such as South Korea’s SK Hynix, to make up for shortfalls caused by the ban.