China issued its latest salvo in an escalating semiconductor war with the US, announcing that Micron Technology Inc. products have failed to pass a cybersecurity review in the country.
(Bloomberg) — China issued its latest salvo in an escalating semiconductor war with the US, announcing that Micron Technology Inc. products have failed to pass a cybersecurity review in the country.
In a statement Sunday, Beijing warned operators of key infrastructure against buying the company’s goods, saying it found “relatively serious” cybersecurity risks in Micron products sold in the country.
The products caused “significant security risks to our critical information infrastructure supply chain,” which would affect national security, according to the statement from China’s Cyberspace Administration.
The results come more than a month after China announced an investigation on imports from America’s largest memory-chip maker. The tech sector has become an key battlefield over national security between the two largest economies, with Washington having already blacklisted Chinese tech firms, cut off the flow of sophisticated processors and banned its citizens from providing certain help to the Chinese chip industry.
Read more: China’s Micron Probe Is Fresh Offensive in Chip War With US
Chinese officials privately say that the probe of Micron is part of a broader trend toward the dominance of “pro-retaliation” voices in Beijing, where national security concerns increasingly trump economic arguments.
“No one should understand this decision by CAC as anything but retaliation for the US’s export controls on semiconductors,” said Holden Triplett, founder of Trenchcoat Advisors and a former FBI counterintelligence official in Beijing. “No foreign business operating in China should be deceived by this subterfuge. These are political actions pure and simple and any business could be the next one to be made an example of.”
Read more: How China Aims to Counter US Efforts at ‘Containment’: QuickTake
While China welcomes products and services provided by companies of all countries as long as they comply with Chinese laws and regulations, the investigation into Micron products are a “necessary measure” to safeguard national security, the regulator said in its statement Sunday. It didn’t detail what the security risks were or identify specific Micron products that are now barred.
Micron, which has previously said it stood by the security of its products and commitments to customers, is evaluating the conclusion of the review, according to a statement Sunday. The company is assessing its next steps, adding it looks forward “to continuing to engage in discussions with Chinese authorities.”
The Boise, Idaho-based chipmaker is the last remaining maker of computer memory based in the US, having survived brutal industry downturns that forced larger rivals such as Intel Corp. and Texas Instruments Inc. to bow out.
It derived nearly 11% of its revenue from mainland China in its last financial year. While that’s relatively low compared to other major tech firms, much of the world’s electronics production goes through Chinese factories in some way and China’s move could have the potential to harm Micron’s customer relationships.
Beijing’s announcement has already drawn condemnation from some lawmakers.
“Every business across America should be asking: is it better right now to invest in the PRC, where the CCP is making it harder each day to do business, or should it be investing more in the US and our allies and partners?” said Raja Krishnamoorthi, an Illinois Democrat and ranking member of the House Select Committee on the Chinese Communist Party.
“The CCP’s actions are making this an increasingly easier choice for American businesses, and we in Congress need to make it even easier for them to come back home and reinvest in America,” Krishnamoorthi said.
–With assistance from Josyana Joshua and Peter Martin.
(Updates with additional context throughout, adds comment from analyst in sixth paragraph, Micron in ninth paragraph.)
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