"Micron Sanctions Unlikely to Affect China"
Amid escalating repercussions following sanctions on the U.S. semiconductor company Micron, evidence has emerged that the Chinese government has been preparing sanctions against Micron for the past three years. For several years already, China has been reducing purchases of Micron products and replacing them with domestic and South Korean companies' products, laying the groundwork to expel Micron from its domestic market and reduce dependence on U.S. technology.
On the 24th (local time), major foreign media outlets reported that after reviewing more than 100 Chinese government bidding documents, Chinese authorities regularly purchased Micron semiconductor chips for use in tax systems and surveillance network projects, but since 2020, the Chinese government's purchase requests have sharply declined.
China's move to block the use of Micron products has been interpreted as a result of the recent intensified U.S.-China conflict, but according to the bidding documents, China has been laying the groundwork for minimizing disruption caused by sanctions for several years.
According to reports, from 2020 onwards, Micron products were mentioned in only four Chinese government bids over three years, including 24 storage devices for the Jiangsu Province Changzhou Meteorological Bureau and image sensors for a hospital in Zhouping City, Shandong Province. This contrasts with the period before 2020, when Micron semiconductor chips were used in various projects by local Chinese governments.
For example, in 2019, the police authorities of Dongguan City in southern China conducted bids worth 187 million yuan (approximately 34.9 billion KRW) and 29 million yuan (approximately 5.4 billion KRW), which included Micron products. Additionally, procurement records from 2015 show that China's National Tax Service spent 5.6 million yuan to purchase 8,000 Micron semiconductor chips for servers.
However, since 2020, the Chinese government's memory chip purchases have mainly been from companies such as Huawei, UNIS, and Hikvision. There were also purchases of Samsung Electronics and SK Hynix products, but most were intended to complement domestic products.
Although the bidding documents do not specify the exact reason for the decline in Micron purchases since 2020, it is presumed to be related to the Chinese government's efforts to reduce reliance on foreign technology and encourage the use of domestic products. Last year, several Chinese government bids explicitly restricted bidding to Chinese-made products.
Because the Chinese government has reduced its purchases of Micron semiconductor chips over several years, it is expected to minimize disruption caused by the recent sanctions.
Alfredo Montupa Hellu of the Conference Board China Center in Beijing analyzed, "Most semiconductor demand within China can be replaced by domestic products, and if not, foreign companies (South Korean firms) can supply them," adding, "China will not suffer damage by banning Micron products."
The Wall Street Journal (WSJ) reported that amid China's sanctions on Micron, U.S. Secretary of Commerce Gina Raimondo and Chinese Minister of Commerce Wang Wentao will hold a dinner meeting on the 25th. Earlier, the Chinese Embassy in the U.S. also announced Wang's visit plans, indicating that the U.S. and China are outwardly showing a dialogue mode.
After seeming to improve following the summit last November, U.S.-China tensions escalated again earlier this year with the reconnaissance balloon incident. However, after a sudden meeting between the two countries' diplomatic and security chiefs in Europe this month and the appointment of a new Chinese ambassador to the U.S., the situation appears to be moving toward a thaw.
President Joe Biden expressed optimism about a thaw in relations with China during a press conference after the conclusion of the G7 summit in Japan on the 21st. However, in the U.S. Congress, there are strong demands for a tough response, including retaliatory measures against China's sanctions on Micron.
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