Chip, is the American Micron the first victim of China’s retaliation?
China bans Micron chips from its critical infrastructure, citing national security risks. The details are unclear, as is the impact on the US company's accounts. Here are facts, numbers and comments
China's cyberspace regulator announced Sunday that operators of critical infrastructure will no longer be able to buy products from Micron, a US company that makes memory chips. According to the Cyberspace Administration of China (CAC), in fact, the company "poses significant risks to the security of the supply chain of China's critical information infrastructures".
It is a decision that fits into the tensions between Beijing and Washington over the trade in semiconductors – fundamental devices for industrial, technological and military progress – and which could lead to the exclusion of Micron from a large number of sectors, from telecommunications to transport to finance : As Reuters points out, “critical information infrastructure” is an umbrella term that can refer to many different things.
WHAT DOES CHINA MEAN BY “THREAT TO NATIONAL SECURITY”?
Micron made it known that it had been notified of the outcome of the investigation ( Startmag had written about it at the beginning of April ) and that it was available for discussions with the Beijing authorities. The company has been labeled a potential threat to "China's national security" by the CAC, but it is unclear what the risks are associated with using its products, or which specific products will be banned.
LIMITED IMPACT ON MICRON'S ACCOUNTS, ACCORDING TO JEFFERIES
However, it is not certain that the measure will have a devastating impact on Micron's business in China, given that its main customers in the country are not infrastructure operators, but companies that make consumer electronic devices, such as smartphones and computer.
In a note, analysts at investment bank Jefferies explain that DRAM (particular chips that lose memory when power is cut) and NAND (a type of flash memory), two of Micron's main products, are not used much in servers. As a result, telecom groups and government infrastructure companies aren't too big customers for Micron. In short, the concrete impact of the ban will not be too heavy for the American chipmaker .
Paul Triolo of the Albright Stonebridge consulting firm thinks the consequences for Micron will be significant: he told the Financial Times that Chinese data centers are "particularly important" customers for the company.
MICRON BETS ON JAPAN
Micron, however, had already hinted that it wanted to focus on another important Asian economy, but part of the Western bloc: Japan, where it will invest 3.7 billion dollars in advanced extreme ultraviolet lithography technologies.
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IS MICRON EASY TO REPLACE?
On the other hand, it is true that the Chinese government and companies could relatively easily displace Micron from their supply chains , given that there are so many other manufacturers of DRAM and NAND memory chips : South Korea's Samsung and SK Hynyx, for example, or the Japanese Kioxia.
WHAT THE G7 SAID ABOUT CHINA
According to Christopher Miller, a professor at Tufts University in Massachusetts and author of Chip War , the timing of the Chinese announcement is relevant. Also last Sunday, in fact, the President of the United States Joe Biden said that the member countries of the G7 have decided to "reduce and diversify our relationship with China", with particular reference to technologies and materials critical for energy transitions and digital.
According to Miller, the Micron case "could be a first test of the G7's efforts on this front", given the importance of the vast Chinese market for Western companies. Micron CEO Sanjay Mehrotra was also present at the top of the group.
China accounts for approximately 15 percent of Micron's revenue, or $5.2 billion in 2022.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/chip-lamericana-micron-e-la-prima-vittima-della-rappresaglia-della-cina/ on Mon, 22 May 2023 13:51:53 +0000.