Micron, the Largest Chip-maker Company Of US To Be Examined By China; Another Tech Battle Between The Dominant Nations

China’s cybersecurity regulator has shared that they would conduct a cyber security review of the national products sold by the US memory chip manufacturing company Micron Technology.

The step has been taken after a dispute over the chip technology between Washington and Beijing. It has been aimed at protecting the security of the supply by addressing critical information infrastructure, avoiding hidden risks, and protecting the national security in the area. This has been stated by the Cyberspace Administration of China.

The organization has not revealed the Micron products they are reviewing. Micron has opened up to media sources stating that they have been in conversation with the CAC and are operating the situation completely. The company has stated that they stand by the security of its products and the commitments promised to its customers.

The U.S. has imposed many export restrictions on chipmaker technologies in China for fear that they could be utilized for the production of chips for diverse applications like artificial intelligence. It could be further incorporated into China’s military and has even blacklisted the largest chipmaking companies in China.

Micron rival Yangtze Memory Technologies were included in the restriction list.

Micron is one of the largest memory chip makers, and they have not replied to the security review. The company’s shares had dropped by 3 percent, accounting for 61.15 USD.

Matthew Bryson, the analyst of Wedbush Securities, has stated that the punitive actions against Micron could mean a broader shift in Chinese policy with other U.S vendors. The prominent Chinese exposures are now at risk for similar reasons.

Japan has even announced that it would align the trade controls with the US, which will help to halt China’s ability to make advanced initiatives Friday. The Netherlands, which makes advanced lithography equipment integral for the manufacture of advanced chips, has made a similar announcement this month.

The declining consumer demands have tampered with the memory chip market dominated by Samsung Electronics in South Korea. Micron receives 10 percent of its revenue from China. But it is not confirmed how the cybersecurity review will affect the company’s sales to Non-Chinese customers.

Most parts of the company’s products are moving to China that are purchased by non-Chinese firms for the utilization of products manufactured in the company.

Micron has offices established in Shanghai and Shenzhen. In addition, it has a chip-manufacturing facility in Xian. The company announced in 2022 that it would stop the DRAM design operations in Shanghai.
Despite the security review conducted by the Chinese Cybersecurity regulator, the demand for Micron has expanded because of the booming demand in the AI industry.

Micron has become the first foreign semiconductor company to be reviewed by the Cybersecurity regulator in China. The move has threatened to heathen the relationship between Washington and Beijing.

But why has China initiated a cybersecurity review against Micron?

The investigation has emerged at a time when China is defeated in all parts of the semiconductor industry by the US and its allies. It appears as China’s attempt to send a warning signal to the neighboring countries of Japan and South Korea. It has been stated by Eng Lifu, the analyst at Shanghai-based semiconductor research organization named ICwise.

These two countries, along with Taiwan have joined the US-led Chip 4 Alliance, which Beijing sees as a Washington plot to exclude China from semiconductor supply chain operations. This group’s senior officials held their first video meeting in February to negotiate resilience in the supply.

According to Wang at ICwise, South Korea is expected to take note of the CAC’s cybersecurity review of Micron. The investigation served a warning to Korean memory chip manufacturers Samsung Electronics and SK Hynix, which have production facilities in China, he said.

Following a reported contract between the Dutch, Japanese, and US governments to constrain exports of some advanced chip-making machinery to China, this caution would extend to the Netherlands. This has resulted in a potent new alliance that might undermine Beijing’s ambitions to develop domestic chip capabilities.

The Chinese government perceives Micron as playing a negative role in the technology industry. “Some speculate that Micron was behind efforts to persuade the U.S government to impose sanctions on China.”

Micron is said to be one of several US semiconductor companies that have expanded their lobbying spending since the Biden administration signed the CHIPS and Science Act into law in August last year, which provides US$52 billion in federal funding for chip production in the US. Months before the legislation became law, Micron announced the closure of its Shanghai chip design center in 2022 and provided relocation packages to 150 Chinese engineers in the US or India.

Edited by Prakriti Arora