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China has launched a review of US chipmaker Micron’s technology on “national security” grounds, as Beijing retaliates against Washington’s increasing restrictions on access to Chinese semiconductor technology.
China’s Cyberspace Administration said in a statement late Friday that it will review the importation of Micron products to protect national security, ensure the safety of its information infrastructure and prevent accidents caused by product problems.
Nasdaq-listed Micron Technology is America’s largest maker of memory chips. The stock fell 4 percent in the U.S. following the announcement.
The semiconductor industry is at the center of an economic divide between the world’s two superpowers. In October last year, Washington introduced sweeping chip export controls in a bid to slow China’s progress in artificial intelligence and supercomputers. Since then, the Netherlands and Japan have joined the US in enacting additional restrictions.
The CAC’s announcement late on Friday marked retaliation from Beijing and added to the challenges facing existing businesses between the two countries.
The Biden administration has stepped up economic pressure on China, with a special committee in Washington increasing bilateral controls on US businesses operating on the mainland. In response, companies in China are exploring how to diversify their supply chains.
In September last year, Micron announced that it would receive a nearly $320mn subsidy from the Japanese government to expand its cooperation with the US.
Although China has taken a more conciliatory tone on trade as it reopens after years of isolation during the outbreak, there are signs that there may be more signs of retaliation in response to Washington’s restrictions.
Last week, top US business leaders, including Apple chief Tim Cook, kept a low profile at the China Development Forum, an annual opportunity to meet top officials in Beijing.
The Netherlands and Japan reached an agreement with the US on semiconductor exports in January, with the latter announcing restrictions on 23 types of equipment on Friday. The agreement is intended to cut off advanced chips that can be used in China’s advanced equipment and machinery.
China’s ambassador to the Netherlands, Tan Jian, warned last month of the consequences if the country continued to export.
“The Chinese government may restrict us from participating in the Chinese market or prevent us from competing effectively with Chinese companies,” Micron said in its quarterly report in March.
He also warned of the threat of losing rare earth materials, mainly produced in China.
“The limited supply of earth’s elements, minerals and metals may limit our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China.” The company said.
In a statement to Bloomberg following the announcement of the investigation, Micron said it is in contact with the Chinese regulator and is cooperating fully.
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