The trade conflict between the US and China is widening. China’s cyberspace authority CAC classifies products from the US memory manufacturer Micron as a threat to national security and has ordered a ban on sales. This was preceded by a review lasting around a month, but the CAC does not explain which products are affected or all of them.
It also remains unclear how Micron’s memory chips are supposed to pose a security risk. In a succinct statement, the CAC (Cyberspace Administration of China) only writes that Micron’s products contain “potentially relatively significant network security issues” that pose a major security risk to the country’s information infrastructure and supply chains. That could affect national security.
Therefore, Micron would not have passed the network security review. Operators of organizations that are part of China’s critical infrastructure should therefore no longer buy Micron products. However, the CAC does not write that Micron memory that is already in use needs to be replaced. Apparently the security risk is not high enough for that.
Analyst: China’s response to US export controls
A semiconductor industry analyst describes China’s actions as a counter to US export controls. Month after month since October 2022, the Americans have put more technology companies from the Middle Kingdom on the index that are not allowed to buy chips and technological equipment. A sales stop of products from a US manufacturer like Micron would scare people, according to analystbut in reality would have little meaning as storage is a common commodity and supply chains would adjust within a few months.
As an alternative to Micron memory, there are enough equivalent products from other manufacturers to choose from. China does not even have to fall back on the market leaders from South Korea such as Samsung or SK Hynix, but could also find what they are looking for at the largest domestic memory chip manufacturer Yangtze Memory Technologies (YMTC). However, YMTC is also impacted by US export controls, as the company is now having trouble getting chip-making machines.
Micron: 11 percent of sales in China
Micron itself is of course more affected by the sales stop. However, the memory chip manufacturer only generates 11 percent of its sales in China and could at least temporarily cope with the failure. Other manufacturers such as Nvidia, AMD and Intel, on the other hand, make significantly more sales in China, as Bloomberg reports, and are over 20 percent. Broadcom or Qualcomm would be hit even harder, as their sales in China account for 35 and 64 percent of total sales, respectively.
Micron said in a brief statement Sunday that it is still evaluating the results of the Chinese review. The company is reviewing its next steps, adding that it looks forward to “continuing talks with the Chinese authorities.”
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