China bans Micron from "critical infrastructure" after G7 communiqué, British PM balks at closing Confucius Institutes, & Xi negotiates Ukraine's peace to save Russia -- China Boss News 5.22.23
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PRC bans Micron from "critical infrastructure" in latest US tech battle
After a seven-week investigation into US chipmaker Micron Technology, China's Cyberspace Administration (CAC) on Sunday said that the firm “posed significant security risks," and ordered "critical national infrastructure operators” to end purchasing from the supplier, Financial Times said.
CAC’s announcement was made “the day after” the release of a G7 Summit communiqué that “issued a stark rebuke of China” on everything from its human rights record to “‘non-market’ economic policies and increasing military assertiveness in the East and South China Seas,” FT staff added. Micron’s CEO attended the summit in Hiroshima as part of a “delegation of business leaders” and “dined with US ambassador to Japan Rahm Emanuel” the evening prior.
Analysts told FT that “Micron presented an obvious first target for Beijing” in the ongoing US-China tech war “as its tech would be more easily replaced with competitors’ chips from South Korean rivals Samsung and SK Hynix.”
FT:
Paul Triolo, an expert on China tech at consultancy Albright Stonebridge, said: “This could be really bad for Micron. It depends how broad China’s definition of critical information infrastructure is, but this could include the financial sector, transportation, energy and data centres.”
He added that data centres were a particularly important customer for Micron memory chips.
But analysts Reuters cited thought the “direct impact” on Micron would be “limited” unless the ban by Chinese officials “prompt[ed] some companies to rid their supply chains of Micron products due to political risks.”
Reuters:
"Since Micron's DRAM and NAND products are much less in servers, we believe most of its revenue in China is not generated from telcos and the government. Therefore, the ultimate impact on Micron will be quite limited," Jefferies said in a note.
. . . Bernstein said a 2% hit to sales was the most realistic estimate given Micron's exposure to the enterprise and cloud server segment is relatively small.
Micron last year announced a $40 billion investment into building “leading-edge memory manufacturing in the U.S.,” by taking advantage of “anticipated grants and credits made possible by the CHIPS and Science Act,” one industry news outlet said.
The CHIPS and Science Act was enacted to support US President Joe Biden's "extreme competition" with Beijing. It prohibits grant recipients from expanding operations in China.
For the rest of FT’s report, China bans Micron’s products from key infrastructure over security risk, click here. For Reuters’ update, China's Micron ban revives US trade tensions, fuels Asian chip rally, click here.
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