In early April, China began investigating Micron for cybersecurity risks and prohibited some sales. The decision is part of the U.S.-China economic struggle, which has begun to disrupt the global IT supply chain.
Last year, the U.S. added Yangtze Memory Technologies Corporation to the entity list, prohibiting U.S. companies from supplying it. As a result, Nvidia cannot export its H100 GPU for generative AI training to China either.
China’s Cyberspace Administration ordered “key information infrastructure” providers to stop buying Micron on Sunday. “Microns have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.”
Micron launched its first production in China 16 years ago, making DRAM and flash memory for computers. As a result, 10.7% of its 2022 revenue came from China, its third-largest market. We asked Micron for comment.
China defines “key information infrastructure” as telecommunications, energy, transportation, banking, defense, and other national interests.
The authority did not specify how Micron poses a cybersecurity risk, but it cited China’s 2016 Cybersecurity Law, which requires real-name verification and local user data storage on local servers. In addition, Micron’s 2022 annual report anticipated China’s problems.
The Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), are investing heavily in the semiconductor industry to advance China’s national policy objectives, which threatens our industry. As a result, we may also be barred from competing with Chinese firms by the Chinese government.
Samsung and SK Hynix, Micron’s Chinese rivals, may gain from the restriction. According to the Financial Times, the U.S. advised South Korea not to fill China’s memory chip market if Micron is banned.
The embargo prompted the U.S. Department of Commerce to “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.”
China has been increasing its technological self-reliance in critical industries like sophisticated semiconductors, which have historically relied on foreign supply. State-owned firms are trying to use indigenous hardware and software.
