China Cites National Security Fears & Ousts Micron Chips

The Cyberspace Administration of China announced a ban on some products from the American memory chip behemoth, Micron. The authority has cited cybersecurity concerns with Micron chips. This move, enacted on Sunday, has come after an April investigation into the potential security risks associated with the company's products.

China has ordered domestic firms providing key information infrastructure' to halt purchases from Micron.

The term, as outlined by the Chinese government, encompasses several areas vital to national interests. They include telecommunications, energy, transportation, finance, and defense.

The Chinese administration claims that Micron's products present serious cybersecurity issues.' In fact, they potentially jeopardize the integrity of the nation's key informational supply chains.

The Foggy Allegation

Micron started its journey in China 16 years ago. Presently, it has become a popular manufacturer of computer memory and data storage components. They include dynamic random-access memory (DRAM) and flash memory.

China is the company's third-largest market, contributing around 10.7% of its 2022 annual revenue.

The specificities regarding how Micron's products constitute a cybersecurity threat remain unclear. However, the Chinese authority referenced the Cybersecurity Law enacted in 2016.

The Micron ban is perceived as a part of the escalating economic competition between the U.S. and China.

This comprehensive legislation sought to bolster the government's internet regulation. It implements policies like real-name verification and mandating local user data storage on local servers.

The rivalry has disrupted the already strained global tech supply chain. Last year, the U.S. imposed restrictions on Chinas state-backed memory chip maker, Yangtze Memory Technologies Corporation.

In addition, Nvidia was ordered to stop exporting its leading-edge GPU for generative AI training, H100, to China.

The Response & Aftermath

In response to China's ban, the U.S. Department of Commerce has come up with a tough promise.

We will engage directly with Chinese authorities to detail the U.S. position and will engage with key allies and partners to address what it termed as distortions of the memory-chip market caused by China's actions.The US Department of Commerce

This ban could advantage Micron's competitors. The primary gainers could be South Korean industry titans Samsung Electronics and SK Hynix. However, the U.S. has implored South Korea to refrain from occupying the market space left by Micron's potential eviction.

Micron, in its 2022 annual report, predicted its possible challenges in China. It highlighted increased competition due to the Chinese government's substantial investment in the semiconductor industry. It also mentioned its state-owned or affiliated entities like Yangtze Memory Technologies Co., Ltd. (YMTC) and ChangXin Memory Technologies, Inc. (CXMT).

China is making a visible shift to substituting foreign hardware and software with domestic alternatives.

The company expressed apprehensions that the Chinese government's potential restrictive measures could restrict its market participation. Besides, they may lose their competitive capability against Chinese brands.

China's recent strides towards technological autonomy in pivotal sectors have become evident in this situation. Against the backdrop of an escalating economic contest, these maneuvers seemingly signify a tangible push toward reducing dependence on foreign suppliers.

The post China Cites National Security Fears & Ousts Micron Chips appeared first on The Tech Report.