China bars chipmaker Micron, as trade tensions with US seem to revive

In the latest trade spat between Washington and Beijing, the Chinese cyberspace regulator banned US Micron Technology from selling its memory chips to domestic consumers saying the chipmaker, had failed its network security review.

Chinese regulator noted Sunday that Micron, the biggest US memory chipmaker, had failed its network security review and that it would block operators of crucial infrastructure from buying from the company.

It remained unclear what are the risks or what products from the company would be affected.

According to the analysts, there would be a limited direct impact on Micron, as most of its key customers in China are consumer electronics players. However, they also warned that the move could encourage companies to end their supply chains of Micron products due to the associated risks.

The US did not welcome the Chinese decision. A spokesperson from the Commerce Department said Sunday: "We firmly oppose restrictions that have no basis in fact."

"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," said the spokesperson.

The trade tensions have ramped up between the two countries in recent months after the visits and raids of the Chinese authorities to US corporate due diligence firm Mintz Group and management consultancy Bain.

"[We] had received the regulator's review and looked forward to continuing to engage in discussions with Chinese authorities," Micron said Sunday.

It is the first US company which has come under the scrutiny of Chinese authorities following a number of export controls by Washington to prevent China from advancing its military capabilities using such chip-making tools.

The ban comes after the Group of Seven (G7) concurred to "de-risk, not decouple" from China and as US President Joe Biden called for an "open hotline" between Washington and Beijing.

The US Commerce Department said it would speak directly with authorities in Beijing to clarify their actions.

"We also will engage with key allies and partners to ensure we are closely coordinated to address distortions of the memory chip market caused by China's actions," the department said.

Micron had generated $5.2 billion from China including $1.7 billion from Hong Kong last year, about 16% of its total revenue, according to Jefferies.

In order to boost its self-sufficiency, China — which is the world's biggest semiconductor buyer — has gradually reduced its reliance on foreign-made chips in a multi-year campaign.