Micron Technology, the leading memory chipmaker, issued a warning on Friday regarding a more significant impact on its revenue due to a Chinese ban on the sale of its chips to crucial domestic industries.
Previously, Micron had projected a low-single to high-single digit percentage of revenue being affected. However, the company now anticipates that around half of its revenue from China-based firms will be impacted, amounting to a low-double-digit percentage of its total revenue.
As the first U.S. chipmaker to be targeted by Beijing following export controls imposed by Washington, Micron faced restrictions due to concerns over the utilization of American components and chipmaking tools to enhance China’s military capabilities.
In May, the Cybersecurity Administration of China stated that Micron had not passed its security review, leading to the prohibition of purchasing the products of the leading U.S. memory chipmaker for operators of crucial domestic infrastructure. The specifics of the identified risks or the affected Micron products were not disclosed.
Micron emphasized that the conclusion reached by the Chinese regulator remains uncertain and subject to change. Additionally, the company mentioned that Chinese government representatives have been reaching out to various customers, including mobile manufacturers, to discuss the future utilization of Micron products.
Approximately one-quarter of Micron’s total revenue is derived from companies based in mainland China and Hong Kong, including both direct and indirect sales through distributors.
Earlier today, Micron announced its plan to invest 4.3 billion yuan ($603.8 million) in the coming years to expand its chip packaging facility in the Chinese city of Xian. CEO Sanjay Mehrotra highlighted this investment as a demonstration of the company’s unwavering commitment to its China business and team.