China bans Micron products from key infrastructure over security risk

China said products from US chipmaker Micron Technology presented a “serious network security risk” as it banned major infrastructure operators from buying them, in its first major measure against a US semiconductor group.

The Cyberspace Administration of China announced on Sunday that the company, which is the largest US maker of memory chips, “presents significant security risks to China’s critical information infrastructure supply chain”. As a result, it ordered “critical national infrastructure operators” to stop buying products from Idaho-based Micron.

The move came after a seven-week investigation by the CAC into Micron, an investigation widely seen as retaliation for US efforts to block China’s access to key technology. Last October, Washington introduced comprehensive chip export controls, and the Netherlands and Japan followed suit.

Analysts said Micron presented an obvious first target for Beijing because its technology would be easily interchangeable with competitors’ chips from South Korean rivals Samsung and SK Hynix. Last month, the White House urged its chip makers from South Korea not to fill any market gap in China if sales of Micron products were restricted.

China is an important market for Micron. Mainland China and Hong Kong accounted for 25 percent of its $30.8bn revenue last year, according to a person familiar with the matter.

Paul Triolo, a China tech expert at consultancy Albright Stonebridge, said: “It could be really bad for Micron. It depends on how broad China’s definition of critical information infrastructure is, but it includes the financial sector, transportation, energy and Data centers may be involved.

He said data centers were a particularly important customer for Micron’s memory chips.

Beijing’s order comes a day after G7 leaders issued a stern rebuke to China’s human rights record, “non-market” economic policies and growing military assertiveness in the East and South China Seas during an annual meeting of world leaders in Hiroshima. has come.

Micron CEO Sanjay Mehrotra was part of a delegation of business leaders attending the G7 summit. He dined with US Ambassador to Japan Rahm Emanuel and City Mayor Jane Fraser on Saturday night in the coastal city of Japan.

“We have received CAC’s notice of termination of its review of Micron products sold in China,” Micron said in a statement. “We are evaluating the findings and assessing our next steps. We look forward to continuing discussions with the Chinese authorities.

“This is new to China,” Triolo said of the Micron ban. “That it is not taking some of the US actions (to block China’s access to the technology).”

In its statement, the CAC said that “China welcomes global companies and various platform products to enter the Chinese market, as long as they comply with China’s laws and regulations.” The regulator’s statement did not provide any details on the “security risks” posed by Micron’s products.

Analysts warned that Beijing’s sanctions could also prompt Chinese companies that do not provide “critical information infrastructure” to eliminate Micron from their supply chains.

“The radius of the eruption could be huge,” Triolo said.