China banned some products from US-based chipmaker Micron after an investigation in early April reveals that they are a cybersecurity risk to the country.

The decision is widely seen as China’s retaliation that’s part of the ongoing US-China economic battle, which has begun to be a big problem for the global tech supply chain.

Last year, the US added Yangtze Memory Technologies Corporation, a China state-backed memory maker, to its blacklist, which prohibits US companies from supplying them without a special permit.

The United States also prohibited NVIDIA from exporting its powerful GPU made for generative AI training to China.

Now, China’s Cyberspace Administration told companies that make “key information infrastructure” to stop buying supplies from Micron. The said companies are those in industries like telecommunication, transportation, energy, finance, defense, etc.

It is said that Micron products “have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.”

How does losing business in China affect Micron? Quite substantially. The US firm opened its first factory in China 16 years ago. China is Micron’s third biggest market, which is about 10.7% of its revenue in 2022.

The said Chinese agency did not mention how Micron poses a cybersecurity risk, but they did cite the country’s Cybersecurity Law that was effective since 2016.

It looks like Micron has already anticipated this ban. In its 2022 annual report, the company said:

In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), that is intended to advance China’s stated national policy objectives. In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.

The ban will surely benefit Micron’s competitors in China, and even those in South Korea. However, a report suggests that the US government has already urged South Korea to not supply China with memory chips in case Micron was banned.

In response, the US Department of Commerce said that they 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.”

Via: TechCrunch

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