China finds security issues in Micron products, blocks purchase

China’s cyberspace regulator said it conducted a network security review of products from Micron Technology, a U.S.-based memory chipmaker, and found them to be non-compliant, Reuters news report said.
The regulator stated that operators of critical infrastructure would be prohibited from purchasing products from Micron. The scope of this decision may encompass various sectors, including telecommunications, transportation, and finance, as per China’s broad definition of critical information infrastructure.

In a statement, the Cyberspace Administration of China (CAC) explained that the review had identified significant network security risks associated with Micron’s products. These risks were deemed to pose a substantial threat to China’s supply chain for critical information infrastructure, thus impacting national security.

Micron confirmed that it had received the CAC’s notice regarding the conclusion of the product review in China. The company expressed its intention to continue engaging in discussions with Chinese authorities on the matter. However, the CAC did not provide specific details regarding the identified risks or which Micron products would be affected by the decision.

Jefferies analysts anticipated a limited impact on Micron, considering that the company’s primary customers in China consisted of consumer electronics firms, such as smartphone and computer manufacturers, rather than infrastructure suppliers. They noted that Micron’s revenue in China primarily stemmed from non-government entities and telecommunications companies, hence minimizing the overall effect on the company.

Micron specializes in manufacturing DRAM and NAND flash memory chips, competing with industry players like Samsung Electronics and SK Hynix from South Korea, as well as Japan’s Kioxia (a Toshiba subsidiary).

The timing of the CAC’s announcement during the G7 summit in Japan carried significance, according to Christopher Miller, a professor at Tufts University and author of Chip War: The Fight For The World’s Most Critical Technology.

Micron’s products came under review by Chinese authorities in late March, with the company expressing cooperation and stating that its business operations in China remained normal.

Approximately 10 percent of Micron’s revenue is derived from China, though it remains unclear whether this decision will affect the company’s sales to non-Chinese customers within the country.

Analysts suggest that the majority of Micron’s products imported into China are acquired by non-Chinese companies for use in locally manufactured products.