Chinese Authorities Ban US Memory Chip Maker Micron Technology in Retaliation for Semiconductor Controls

Chinese authorities recently imposed a ban on U.S. memory chip maker Micron Technology in retaliation for U.S. semiconductor controls, but experts say economic realities will limit the effectiveness of Chinese President Xi Jinping’s counterattack.

At the end of May, Chinese officials imposed a ban on the US memory chip maker Micron on the grounds of national security risks, restricting key industries from purchasing Micron products, reflecting Beijing’s attempt to fight back against US restrictions on China’s access to advanced semiconductor technology. However, some analysts pointed out that the Chinese authorities are trying to revive the sluggish economy, and the effectiveness of countermeasures is relatively limited.

Ban Micron products in retaliation for US semiconductor control

China announced on May 21 that Micron’s products have serious cyber security issues, which pose a major security risk to China’s critical information infrastructure supply chain and affect China’s national security. Micron chips are prohibited from being used in critical infrastructure.

China’s ban is widely seen as retaliation for U.S. restrictions on China’s access to advanced semiconductor technology. The day before China announced the Micron ban, the Group of Seven (G7), headed by the United States, announced that it would unite in response to China’s “economic coercion”, but emphasized that it has no intention of “decoupling” with China, but must “de-risk” relations with China.

The United States has adopted a series of export control measures in the past year to prevent some chips and chip manufacturing technology from being used by China for the military; the United States has also included Micron’s competitor, China’s memory chip maker Yangtze River Storage, on the trade blacklist; it has also prompted Japan and the Netherlands Restrict the export of key semiconductor equipment to China.

For the first time to censor foreign companies, the cyber security law has become a tool of retaliation

The Micron ban represents a major policy shift in China’s response to U.S. technology regulation. Gary Ng, senior economist at French bank Natixis, said this was the first time China would scrutinize foreign companies after it enacted stricter cybersecurity regulations in 2021, and it was rare for such scrutiny to extend to national security.

China promulgated the “Cyber ​​Security Law” in 2021, allowing the authorities to impose penalties on individuals or organizations that endanger China’s “critical information infrastructure”. Although the Chinese authorities have initiated cybersecurity reviews of many domestic companies, they mostly focus on data issues rather than national security.

Wu Zhuoyin believes that he would not be surprised if Chinese regulators face other geopolitical issues in the future and use censorship as a tool of retaliation.

Lockdown on Micron, China weighs economic realities

However, experts pointed out that China’s choice to impose a ban on Micron is also the result of many considerations. In particular, China’s economy is facing difficulties and its growth rate has slowed down significantly. As Xi Jinping tries to fight against the so-called US hegemony, he also needs to weigh the impact of such measures on the economy.

For China, Micron is a relatively easy target for sanctions because its products can be replaced by products from South Korea’s Samsung Electronics and SK Hynix. But other U.S. companies, such as Intel and Qualcomm, are more difficult for China to sanction because it is not easy to find alternative suppliers.

Bloomberg quoted Ja Ian Chong, an associate professor at the National University of Singapore, as saying: “Restricting American companies such as Micron is just to signal that Beijing is willing to take a little pain when competing with the United States.” “But Beijing is very cautious. to limit their own costs.”

Korean companies make up for China’s chip gap?Touchstone of Korea-U.S. Relations

On the other hand, if South Korean memory chip makers such as Samsung and SK Hynix do not increase the supply of memory chips in China at the request of the United States, the effectiveness of China’s Micron ban may be limited.

The Financial Times reported in April that the White House had asked South Korea to urge chipmakers not to fill any market gaps in China if sales of Micron products were curtailed. Whether to fill the Micron gap will not only test how Samsung and SK Hynix respond to the US-China conflict, but will also become a touchstone for the relationship between South Korean President Yoon Suk-yue and the US.

Former U.S. Deputy Ambassador to South Korea Robert Rapson said that this is a test of the Yin Xiyue government’s consistent policy with the U.S. on China issues, that is, whether South Korea will cooperate with U.S. policies and sacrifice the core economy and business of high-tech companies Benefit.

(This article is sponsored by Central Radio Authorized to reprint; source of first image: shutterstock)

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