China bans its big companies from buying chips from US manufacturer Micron Technology. Even if the group could put the decision to some extent, according to expert Hmaidi, the ban sends a warning signal to all Western providers.
It is the first serious measure against an American semiconductor company: Beijing prohibits large Chinese companies from buying from the US group Micron Technology. The Chinese cyberspace administration CAC announced that its review of Micron products had revealed “significant security risks”. The authority then warned the operators of important Chinese information infrastructures against buying the company’s products. This includes, for example, telecommunications companies and state-owned banks. The e-commerce giant Alibaba is also a buyer of the important memory chips.
“The assessment of the CAC is very clearly politically motivated and could further accelerate existing trends in the chip conflict,” says Antonia Hmaidi, analyst at the Mercator Institute for China Studies, ntv.de. The result of the review is “not a big surprise”. In her opinion, however, the decision could send a signal to Western suppliers: the Chinese market and Chinese sales are not safe – even if companies comply with American export restrictions.
Micron is an obvious target for Beijing
Micron is the largest manufacturer of memory chips in the USA. According to Hmaidi, the Idaho-based group has so far generated around eleven percent of its sales in China. Analysts see Micron as an obvious target for Beijing, as the US company’s technology could easily be replaced by chips from South Korean rivals Samsung and Sk Hynix. Hmaidi also believes it is possible that Chinese companies that do not provide any critical information infrastructure at all could now decide against Micron.
However, given that Micron has signed a $15 billion agreement with the Japanese government, the ban might be a little less severe for the US company. “The loss of the Chinese market could be compensated for by new markets for Micron if other allied countries support the company more,” says Hmaidi.
The US semiconductor manufacturer announced that it had been informed about the test. The company will seek talks with the competent authority. “We evaluate the conclusion and consider how to proceed,” said the group. The company is also looking forward to “continuing discussions with the Chinese authorities.” Hmaidi does not rate negotiations between Micron and the authorities as particularly promising. “Talks between the Chinese and US governments would be far more likely to succeed.” In addition, she considers a reversal of the decision to be very unlikely.
“Measure contradicts assertions”
The Chinese ban comes nearly two months after Beijing announced an investigation into Micron’s imports. It is seen as retaliation for US efforts to restrict China’s access to key technologies. Washington only introduced far-reaching export controls for chips in October last year.
The CAC’s assessment underscores the tense relations between Beijing and Washington. The US Department of Commerce said it strongly opposed the measures. “This action, along with the recent attacks on other American companies, goes against the PRC’s pledges to open up its markets and promote a transparent regulatory framework,” the Commerce Department said.
The G7 heads of state and government had previously stressed their readiness for a “constructive and stable relationship” with China during the annual meeting. At the same time, they counted the People’s Republic because of its human rights situation, an economic policy that “does not conform to the market” and the tense situation in the East and South China Seas.