China Bans Micron Chips Claiming They Pose a Risk to National Security

China bans the use of Micron's chips by major Chinese firms after deciding they pose "significant security risks."

As The Wall Street Journal reports, the Cyberspace Administration of China (CAC) carried out a review of Micron which concluded that the US chipmaker poses a threat to national security. Any Chinese companies operating in information infrastructure, for example banks and telecomms firms, are effectively banned from using Micron's products.

In response, the US Commerce Department released the following statement:

"We have seen the announcement by the People's Republic of China (PRC) regarding Micron. 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 the PRC's assertions that it is opening its markets and committed to a transparent regulatory framework. We will engage directly with PRC authorities to detail our position and clarify their action. 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."

According to research firm Gavekal Dragonomics, Micron currently generates around 10% of its revenue from China, which is now sure to be negatively impacted. In response to the review, Micron said, "We are evaluating the conclusion and assessing our next steps ... We look forward to continuing to engage in discussions with Chinese authorities."

This review counts as the first by CAC into a foreign firm and, as the WSJ points out, Micron was viewed as an "easy target" by China because it's relatively simple for Chinese companies to switch to alternative memory chips following the ban. It's currently unclear what evidence CAC found that Micron poses a security risk, but the ban is currently being viewed as a form of retaliation for the US banning advanced chip-making technology sales to China.

Last year Micron announced it was building a $100 billion chip megafab in New York, shipped the first samples of the world's most advanced DRAM, and shipped the world's first 232-layer NAND SSD. So while the Chinese ban will be felt by the company, it seems unlikely Micron will have difficulty finding new customers elsewhere in the world to plug any shortfall in sales.