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China bans Micron chips from being used in important facilities, citing “national security” risks

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China has stopped selling some Micron goods after opening an investigation into the American memory chip giant in April to look for cybersecurity risks.

Many people see this choice as a tit-for-tac in the ongoing economic competition between the U.S. and China. This competition has already started to shake up a global tech supply chain that is very interconnected.

Last year, the U.S. added Yangtze Memory Technologies Corporation, a Chinese company that makes memory chips and is backed by the government, to the entity list. This means that U.S. companies can’t sell to it without permission. The U.S. has also stopped Nvidia from sending China its H100 GPU, which is a state-of-the-art piece of hardware for teaching AI to make new things.

Sunday, China’s Cyberspace Administration told Chinese companies that provide “key information infrastructure” not to buy from Micron anymore. Products made by Micron “have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.”

Micron started its first factory in China 16 years ago. Its main business is making computer memory and data storage devices, like DRAM and flash memory. China is its third-biggest market. In 2022, 10.7% of its total annual income will come from China. We have asked Micron what they think.

China’s definition of “key information infrastructure” includes communications, energy, transportation, finance, military, and any other area that is important to the country.

The authority didn’t say how Micron is a cybersecurity risk, but it did mention China’s Cybersecurity Law, which went into effect in 2016. This is a broad law that aims to strengthen the government’s control over the internet, with rules like verifying real names and storing local user data on local servers.

In its 2022 annual report, Micron looked ahead to the problems it would face in China.

In particular, we face the threat of more competition because the Chinese government and a number of state-owned or affiliated companies, like Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), are investing a lot in the semiconductor industry to help China reach its stated national policy goals. Also, the Chinese government could make it hard for us to sell on the China market or keep us from dealing well with Chinese businesses.

The ban could help Micron’s rivals in China, such as Samsung Electronics and SK Hynix, which are both big companies in South Korea. But, according to the Financial Times, the U.S. also told South Korea not to sell memory chips in China if Micron is banned.

In reaction to the ban, the U.S. Department of Commerce said it will “engage directly with Chinese authorities to detail the U.S. position and will engage with key allies and partners to address what it called distortions of the memory-chip market caused by China’s actions.”

China has been working hard over the past few years to become more technologically independent in key industries like advanced semiconductors, which used to depend on foreign providers. For example, there has been a push across state-owned businesses to replace foreign hardware and software with alternatives made in China.

Info Sources-Forbes, MSN, TechCrunch, South China Morning Post

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