China imposes sales restrictions on Micron as it escalates tech battle with Washington

Hong Kong

China has banned Chinese companies working on key infrastructure projects from buying products from US semiconductor manufacturer Micron, in a major escalation of an ongoing battle between the world’s top two economies over access to crucial technology.

The Cyberspace Administration of China announced the decision on Sunday, saying the US chip maker had failed to pass a cybersecurity review.

“The review found that Micron’s products have relatively serious cybersecurity risks, which pose significant security risks to China’s critical information infrastructure supply chain and would affect national security,” the regulator said in a statement.

As a result, operators involved in domestic critical information infrastructure projects should stop purchasing products from Micron, it said.

The decision came seven weeks after the Chinese regulator kicked off a cybersecurity review of Micron’s products, in apparent retaliation against sanctions imposed by Washington and its allies on China’s chip sector.

Micron Technology

(MU) is one of the largest memory chip makers in the United States. It derives more than 10% of its revenue from mainland China.

Micron told Reuters it had received the regulator’s notice and looks “forward to continuing to engage in discussions with Chinese authorities.” It did not immediately reply to a CNN request for comment.

Since October 2022, Washington has imposed sweeping export curbs on advanced chips and chip-making equipment to China, in an attempt to cut off China’s access to critical technology for military purposes.

In March, Japan and the Netherlands, both key US allies, also announced restrictions on overseas sales of chip-making technology to countries including China. China has strongly criticized the restrictions, labeling them “discriminatory containment” directed at the country.

Chips are at the center of Beijing’s bid to become a tech superpower. China has its own chip manufacturers, but they supply mostly low- to mid-end processors used in home appliances and electric vehicles.

The semiconductor battle is part of a growing divide between the United States and China. In recent years, relations between the two have reached their lowest level in decades.

Tensions escalated this year after a suspected Chinese spy balloon was shot down by US fighter jets in February and Beijing continued to deepen its ties with Russia despite its continued invasion of Ukraine.

However, US President Joe Biden said on Sunday that he expected ties between the two countries to improve soon.

“I think you are gonna see that begin to thaw very shortly,” Biden told a news conference at the end of the Group of Seven summit in Japan.

He said he had agreed with Chinese President Xi Jinping in November to keep communications open, but that everything changed after a “silly balloon that was carrying two freight cars worth of spying equipment” was shot down.

“We are not looking to decouple from China,” he said. “We are looking to de-risk and diversify our relationship with China.”