China's retaliation in the escalating tech war with the US!

In China's strongest retaliation to date amid rising US tech sanctions, authorities have ruled that the products of Micron, a US-based memory chip manufacturing giant based in Boise, Idaho, threaten China's national security and ordered key IT infrastructure operators to stop purchasing them. The move was described by some Chinese commentators as a "show of the sword" by Beijing.

The de facto ban on the sale of Micron Technology products in China is likely to push customers to alternative suppliers, including Korean and local players.

Micron threatens China's security

The US government criticized Beijing's decision. In a statement yesterday, the U.S. Department of Commerce said the Micron decision and recent raids by Chinese authorities on U.S. consulting firms run counter to the country's commitment to opening up the market and providing a transparent regulatory framework.

The Cybersecurity Review Bureau under China's Cyberspace Administration (CAC) said on Sunday that micron Technology failed its cybersecurity review, seven weeks after the regulator launched a probe into Micron's products.

The Chinese government provided some details about the probe, including which Micron products were under review and tested. The results of the investigation, which was relatively quick for such a large fine, could close China to Micron - a market that in 2022 accounted for about 11 percent of the US company's total revenue of $30,8 billion.

Some Chinese observers say Micron has come under Beijing's crosshairs after it leveled allegations against the Fujian Jinhua chip, once a rising star in the country's efforts to catch up in memory chip production, prompting a high-profile accusation of trade secrets by US authorities to the company .

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Chinese stocks up!

Shares of Chinese memory chip companies rose on Monday in Shanghai and Shenzhen stock markets in hopes of filling the gap left by Micron. A research memo published by Citic Securities says Chinese customers will shift their orders to South Korean companies such as Samsung Electronics and SK Hynix and Chinese domestic memory chip makers including DRAM from Changxin Memory Technology Corp (CXMT) and NAND from Yagtze Memory Technologies ( YMTC Corporation).

However, according to a Financial Times report last month, citing its sources, the US asked South Korea to urge chipmakers not to fill any market gap in China should Beijing ban Micron.

China's memory players have gained a foothold over leaders like Micron in recent years, thanks to Beijing's push to become more self-sufficient in chip.

YMTC is advancing the use of home-made equipment to produce advanced memory chips.

Bai Wenxi, chief economist at IPG China, said that "the high-end memory chip sector is still mainly occupied by global companies from the US, Japan and South Korea." added that Micron's failure to pass the national security review "created opportunities for domestic companies to enter the mid-to-high-end memory chip sector."

History repeats itself?

This isn't the first time Micron has faced a sales ban. A court in southeastern Fujian province ruled in July 2018 that Micron's Shanghai factory should immediately stop selling its semiconductors in China, but the ban was never fully implemented and the products remained widely available on Chinese e-commerce sites.

In its statement, the CAC (Chinese Cyberspace Administration) said that China is determined to open up and that foreign companies are welcome in the Chinese market as long as they comply with Chinese laws and regulations, seen by many as an attempt to allay the potential concerns of other foreigners. tech giants. CAC also refrained from imposing a fine on Micron.

Micron Power

Micron first entered China in 2001 to seize opportunities in a fast-growing market.

In 2004, the company opened a small office in Shanghai with 60 employees, and then expanded operations by opening offices in Beijing and Shenzhen to provide sales and marketing services throughout China.

In 2017, Micron opened a new manufacturing facility in Xi'an, the capital of the central province of Shaanxi, for testing and packaging semiconductor products. However, it closed its research and development center in Shanghai at the end of 2022, three months before the CAC probe.

Co dalej?

The U.S. Department of Commerce said that "will work directly with the PRC authorities to refine our position and explain their actions", adding that it will work with key allies and partners to ensure coordination on target "dealing with the disruption in the memory chip market caused by China's actions".

According to Bloomberg data, Micron's biggest customers in China, ranked by revenue share, are computer giant Lenovo Group, smartphone maker Xiaomi Corp, Inspur Electronics Information, ZTE, Coolpad and China Electronics Corp.