Micron's China Sales Account for 10%
On the final day of the Group of Seven (G7) summit on the 21st, China formalized sanctions against Micron, the largest U.S. memory semiconductor company. Since the end of March, China had been investigating Micron, and for the first time, it cited security risks and announced official sanctions, which is interpreted as a retaliatory measure against U.S. sanctions on China.
According to Bloomberg and other sources, the Cyberspace Administration of China (CAC), under the National Internet Information Office, announced that a cybersecurity review of Micron products found relatively serious cyber security risks.
The CAC stated, "We have concluded that Micron products did not pass the internet security review," adding, "(Micron products) have relatively serious network security issues that pose significant security risks to China’s critical information infrastructure supply chain and affect national security."
Based on the investigation results, Chinese authorities said that operators of critical information infrastructure must stop purchasing from Micron. According to China’s definition of critical information infrastructure, sectors ranging from transportation to finance are included, but it did not specify exactly which types of companies or businesses this will apply to.
China has been conducting a security investigation on Micron since March. The announcement of the results came about two months later, and it is analyzed that the impact of halting purchases in China?the third largest market after the U.S. and Taiwan?is inevitable. The sales proportion Micron generates from the Chinese market accounts for about 10% of its total revenue.
This is the first time China has conducted a cybersecurity review on a foreign semiconductor company. Chinese authorities explained that the reason for the internet security review of Micron products was "to prevent harm to the safety of the country’s critical basic information infrastructure and as a necessary measure for national security." They also added, "China firmly promotes a high level of openness to the outside world and welcomes companies from all countries to enter the Chinese market as long as they comply with laws and regulations."
China’s sanctions targeting a U.S. company are seen as a form of retaliation against U.S. sanctions on China. Analysts interpret this as China using its massive domestic market as a weapon to counterattack the U.S. amid the U.S. and its allies controlling semiconductor equipment exports to China. In October last year, the U.S. effectively banned the export of advanced semiconductor manufacturing equipment to Chinese companies, and in December of the same year, it added 36 Chinese companies, including YMTC, China’s largest memory semiconductor manufacturer, to the export control list.
In particular, the strong joint statement targeting China issued at the G7 summit held in Hiroshima, Japan, from the 19th to the 21st, appears to have influenced this development. On the 20th, G7 leaders pressured China comprehensively on issues including Taiwan, economic coercion, the South China Sea, and human rights during the Hiroshima summit.
The G7 stated in their declaration, "We are ready to build a constructive and stable relationship with China" and "Cooperation with China is essential," but detailed concerns and containment messages toward China were carefully outlined in areas such as security and economy. In the security section, the statement reaffirmed "the importance of peace and stability in the Taiwan Strait as indispensable to the security and prosperity of the international community."
It also expressed "serious concern about the situation in the East China Sea and South China Sea," and strongly opposed "any unilateral attempts to change the status quo by force or coercion," thereby firmly containing China. In the economic domain, the statement said, "We will not pursue decoupling (excluding specific countries from supply chains)," but also acknowledged, "At the same time, we recognize that economic resilience requires risk elimination and diversification," and declared, "We will reduce excessive dependence in our critical supply chains."
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