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In a significant escalation of the ongoing technology battle between the world’s top two economies, China has banned US chip maker Micron from selling to Chinese companies involved in crucial infrastructure projects.
The decision, announced by the Cyberspace Administration of China (CAC) on Sunday, cited Micron’s failure to pass a cybersecurity review. The move comes on the heels of the Group of Seven (G7) summit in Hiroshima, Japan, where leaders expressed growing concerns over China’s actions.
According to the CAC, a review of Micron’s products revealed “relatively serious cybersecurity risks” that pose significant threats to China’s critical information infrastructure supply chain and national security. As a result, operators working on domestic critical information infrastructure projects have been instructed to cease purchasing products from Micron, the regulator stated.
Following the announcement, Micron Technology (MU) shares dropped approximately 6% in premarket trading on Monday, while its Asian rivals experienced gains. Ingenic Semiconductor, a Chinese memory chip maker, saw its shares rise by 2.8%, while Shenzhen Techwinsemi Technology surged by 6.3%.
Toyou Feiji Electronics experienced a substantial increase of 14%. In South Korea, SK Hynix, one of the world’s largest memory chip manufacturers, outperformed the market with a gain of 0.9%.
The Chinese regulator’s decision comes after a seven-week cybersecurity review of Micron’s products, which appears to be in response to sanctions imposed by Washington and its allies on China’s chip sector.
Micron, one of the leading memory chip makers in the United States, derives over 10% of its revenue from mainland China. The company confirmed that it had received the notice from the regulator and was evaluating its next steps. “We look forward to continuing to engage in discussions with Chinese authorities,” Micron stated.
The US Commerce Department expressed firm opposition to the restrictions, stating that they had no factual basis. The department was quoted by Reuters as saying, “This action, along with recent raids and targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework.”
China’s Foreign Ministry accused G7 leaders of hindering international peace and called on the group to reflect on its behavior and change course. The tensions between the US and China in the tech sector continue to escalate, raising concerns about the long-term impact on global technology supply chains and the overall relationship between the two economic giants.
