China banned companies from buying products from leading American memory chip manufacturer Micron Technology, escalating the high-stakes chip war the two countries are engaged in.
The ban on Micron was announced after China's Cyberspace Administration carried out a review of the products of the US manufacturer. China said high-end chips manufactured by Micron pose cyber security risks. The Chinese regulator ordered operators involved in domestic critical information infrastructure projects not to purchase Micron chips. .
Setback for Biden
Interestingly, the Chinese move came just a day after US President Joe Biden said Washington and its G-7 allies were committed to 'de-risking' the relationship with China. The G-7 meeting slapped tough new sanctions on Russia but softened its tone on China. Biden had specifically said the US was looking to 'diversify' its relationship with China. "That means taking steps to diversify our supply chains," he said.
However, the latest Chinese move flies in the face of any such effort. "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 Chinese regulator said.
US Targets China Tech Sector
For about a year, the Biden administration has been targeting the chip industry in China by rolling out export curbs on advanced chips and chip-making equipment. In October last year, the Biden administration tightened the screws on the Chinese chipmakers by enforcing more export controls targeting them. The move sought to stop not just American companies from selling key equipment and technology to China but persuade foreign firms to do so.
The measures unveiled by President Joe Biden were aimed at closing China out of manufacturing some key semiconductor chips. The new rules further restricted toolmakers like KLA Corp, Lam Research Corp and Applied Materials Inc from shipping any equipment Chinese-owned factories that make advanced logic chips.
This year, US allies Japan and the Netherlands joined Washington in rolling out stringent export controls that would aim at crippling the Chinese semiconductor industry. Japanese Prime Minister Fumio Kishida and the Dutch Prime Minister Mark Rutte held discussions with US President Joe Biden in January on the controls on the Chinese chip industry.
Japan and Netherlands Slap Curbs
While Netherlands company ASML Holding NV controls the market for lithography technology, Tokyo Electron Ltd. rivals US companies that are key players in the chip industry.
China believes that the US curbs on its chips industry is a direct effort to restrict it from becoming a tech super power. Although China is one of the world's largest chipmakers, most of the Chinese chip industry is catering to low-end chips. The US chip technology is crucial for Chinese companies to make rapid progress in advanced technologies.
The US Commerce Department lashed out at China after it enforced the ban on Micron. "This action, along with recent raids and targeting of other American firms, is inconsistent with [China's] assertions that it is opening its markets and committed to a transparent regulatory framework," the department said, according to Reuters.
The Chinese move will leave Micron Technology with a significant hit as about 10 percent of its revenues come from mainland China.