Chips of the American Micron Technology will be excluded from the key infrastructure of China

The Chinese regulator banned the use of American Micron Technology (MT), one of the leading manufacturers of memory chips, in the country’s critical infrastructure. The corresponding statement was published by the Chinese Cyberspace Administration on May 21. Official reason: MT products have not passed the network security test. As a result, key infrastructure operators in China are no longer allowed to use them in their operations. The list of areas from which MT products will be excluded is quite extensive due to the fact that the Chinese authorities have a very broad understanding of the term “key infrastructure”. It can be telecommunications, transport, financial infrastructure and other areas.

Micron said in a press release that it has reviewed the Chinese authorities’ report and expressed hope for continued dialogue with Beijing. According to Reuters, the company’s losses after such a decision by the Chinese regulator will not be fatal. The company mainly manufactures DRAM and NAND memory devices, which are more commonly used by smartphone and computer manufacturers than by key infrastructure organizations in China. Micron products are also not widely used as part of servers, and their limited use in telecommunications and government organizations significantly mitigates the damage that the company will suffer, writes Reuters. Nevertheless, the Chinese market remains important for it – for example, in 2022, mainland China and Hong Kong brought the company 25% of its total revenue (which totaled $ 30.8 billion).

The decision of the Chinese authorities to abandon Micron products coincided with the G7 summit and the decision of the company itself to invest $3.7 billion in Japan, one of the closest allies of the United States. According to the company’s plan, the money will be invested in what is called deep ultraviolet photolithography, a cutting-edge technology that is being used to produce the latest chips. Micron will be the first company to bring this technology to Japan. Tokyo is extremely interested in such investments, as it intends to revive its chip production and regain ground lost in decades. Now Japan’s contribution to global chip production is only 10%, compared to 50% in the 1980s. In addition, the United States, for political reasons, motivates its allies to cooperate in order to more effectively counter China’s technological development. At the last G-7 summit, US President Joe Biden called on foreign partners to “secure and diversify relations with China.”

In fact, the ban on the use of products in Chinese key industries is a very serious restriction, says Alexei Maslov, director of the Institute of Asian and African Countries at Moscow State University. The decision of the Chinese authorities may lead to the complete withdrawal of the company from the Chinese market. Beijing has demonstrated a tough stance in protecting its IT sector and is heading for technological sovereignty. For example, Maslov continues, the Chinese government has provided a $3 billion grant for the development of its high-tech semiconductor products, as well as organizing new technology zones and creating a program for the development of related infrastructure. As a result, in the next 3-4 years it will be possible to talk about China’s success in creating its advanced technologies in the field of semiconductors, Maslov sums up.

Since 2018, Washington has been consistently pursuing a policy of trade war and technological isolation against China, which is drawing its allies into it, says St Petersburg University professor Yana Leksyutina. In an effort to overcome technological dependence on China, the United States is striking at Chinese telecommunications companies and semiconductor manufacturers. Moreover, in its confrontation with Beijing, the United States is involving its partners both in the G7 and in other international formats, the expert says. This forces the PRC to take retaliatory measures that could harm the United States.