The Cyberspace Administration of China announced this week that key infrastructure firms would be banned from purchasing chips manufactured by Micron Technology, an Idaho-based company, saying that the products pose “significant security risks”. The move marks Beijing’s first retaliation in response to a series of measures imposed by Washington and its allies on China’s own chip-making industry.
The news is arguably a bigger deal for Micron than it is for China’s own industry. Since first establishing a manufacturing facility there in 2001, China has become an increasingly important market for the company. Management have been talking more about the country in recent annual reports as the company’s sales there have grown — last year accounting for ~10% of its $30bn+ in total revenue.
For China, however, the memory chip ban is unlikely to hurt too much. The type of chips Micron makes are fairly easy to replace with suppliers from South Korea, according to Bloomberg. Whether China takes action against US companies like Qualcomm and Intel, which make chips that often end up in Chinese smartphones and are much harder to replace, will be telling on how far China is willing to push this latest trade skirmish.