The Semiconductor War Continues as China Bans Micron from Key Infrastructure Projects

[JWillBecks]

Summary

China, after several weeks of investigation, has decided to ban Micron products from key infrastructure projects citing concerns around "network security risks".

 

There is expected to be a significant impact on the business revenue for Micron, as China roughly makes up 10-25% of the sales made last year.

 

This may be a response to the restrictions imposed by Japan and Netherlands (both US allies) where they restricted sales of chips to China in March. 

 

This is a bold new move for China, and there are signs that this could be the first of many retaliations against the US market and its chip production. 

 

Quotes

Quote

China says products made by US memory chip giant Micron Technology are a national security risk.

The country's cyberspace regulator announced on Sunday that America's biggest maker of memory chips poses "serious network security risks".

It means the firm's products will be banned from key infrastructure projects in the world's second largest economy.

It is China's first major move against a US chip maker.

Quote

Analysts said Micron presented an obvious first target for Beijing as its tech would be more easily replaced with competitors’ chips from South Korean rivals Samsung and SK Hynix. Last month the White House asked South Korea to urge its chipmakers not to fill any market gap in China if the sale of Micron products was restricted.

Quote

The US Commerce Department said “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,”

My thoughts

I think this is going to have a much wider impact, not just on the business and shareholders, but also on the consumer. It's likely that costs will go up for chips in the short term, but in the long term who knows? The US has stated that they want to strengthen ties with China and there are plans to arrange a meeting to address these spying accusations, so hopefully this will help. 

 

Sources

BBC News - https://www.bbc.co.uk/news/business-65667746

CNN - https://edition.cnn.com/2023/05/22/tech/china-ban-us-micron-chips-intl-hnk/index.html

Financial Times - https://www.ft.com/content/e6a8e034-cbc2-4267-9b41-b7670db7d130

[grg994]

4 minutes ago, JWillBecks said:

China says products made by US memory chip giant Micron Technology are a national security risk.

This is a very obvious and bold lie. Micron makes DRAM and NAND flash which are passive components, they don't run code or do any logic.

[porina]

Avoiding all the political stuff, if Micron can't sell to China then they'll have more availability to rest of world. I'm not sure if US' request to Korean companies not to sell more to China would have a real impact, although the US-KR relationship is also historically complicated and the US may try to pull strings at higher level to prevent it happening.

[PDifolco]

That's just a sh#tty Chinese political response to US sanctions vs Huawei and such, with even less evidence...

Will make life harder for them both, not sure it'll really change things overall

 

[williamcll]

Maybe this will convince micron to open an actual all American fab since even taiwanese SSDs are starting to show up with Yangtze memory components. 

[CTA14]

If it's OK for the US to say certain Chinese products are spying on them, thus banning them from sale in the US. Then the same shall be expected from China. 

 

Quote

The US Commerce Department said “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,”

[SorryBella]

34 minutes ago, CTA14 said:

If it's OK for the US to say certain Chinese products are spying on them, thus banning them from sale in the US. Then the same shall be expected from China. 

The issue with it is simple: If they believe this was the case why dont go for the head? Intel was and is still currently the biggest semiconductor manufacturer in the world, making many form of integrated circuit which would have more logic than a DRAM.

[Donut417]

1 hour ago, grg994 said:

This is a very obvious and bold lie. Micron makes DRAM and NAND flash which are passive components, they don't run code or do any logic.

Micron is HQed out of Idaho, thats enough to ban them. To be honest I dont blame them for playing the game that we started. 

[PDifolco]

30 minutes ago, Donut417 said:

Micron is HQed out of Idaho, thats enough to ban them. To be honest I dont blame them for playing the game that we started. 

Exactly

US banning chips for China because they could be used in the military... Pants can too, Levi's should be banned 

[decolon]

I saw someone on Reddit say the US should ban Coke and McDonalds from selling in China bc the Chinese military can drink Coke and eat Big Macs

[Brooksie359]

10 hours ago, PDifolco said:

That's just a sh#tty Chinese political response to US sanctions vs Huawei and such, with even less evidence...

Will make life harder for them both, not sure it'll really change things overall

 

I mean this whole thing is stupid tbh. I feel like nothing good has come from banning certain countries products. 

[Donut417]

2 hours ago, Brooksie359 said:

I mean this whole thing is stupid tbh. I feel like nothing good has come from banning certain countries products. 

All it means is more capacity at the Micron Fabs for the rest of the world.  While I know the CCP will state this is in response to a US sanction, etc. One thing to consider, China might be doing this to bolster domestic chip manufacturing and designing. The countries who have the fabs and the knowledge to know how to design chips are going to be the winners going in to the future. 

[Brooksie359]

2 minutes ago, Donut417 said:

All it means is more capacity at the Micron Fabs for the rest of the world.  While I know the CCP will state this is in response to a US sanction, etc. One thing to consider, China might be doing this to bolster domestic chip manufacturing and designing. The countries who have the fabs and the knowledge to know how to design chips are going to be the winners going in to the future. 

That isn't good for micron regardless. Less demand mean lower prices but I guess that is good for other companies that need nand? Anyways I think this isn't a good thing and I was afraid of things like this happening after people started banning Chinese products. 

[Donut417]

Just now, Brooksie359 said:

That isn't good for micron regardless. Less demand mean lower prices but I guess that is good for other companies that need nand? Anyways I think this isn't a good thing and I was afraid of things like this happening after people started banning Chinese products. 

American companies are bracing for a recession. So Micron likely had plans in place for when the bottom of the economy drops out. Also Micron is an American Semi conductor company, the government isnt going to let them fail. We need them too bad. 

[TrigrH]

5 hours ago, decolon said:

I saw someone on Reddit say the US should ban Coke and McDonalds from selling in China bc the Chinese military can drink Coke and eat Big Macs

more the reason not to ban them, let them eat the garbage food haha  

13 hours ago, JWillBecks said:

My thoughts

I think this is going to have a much wider impact, not just on the business and shareholders, but also on the consumer. It's likely that costs will go up for chips in the short term, but in the long term who knows? The US has stated that they want to strengthen ties with China and there are plans to arrange a meeting to address these spying accusations, so hopefully this will help. 

I think we will end up seeing even cheaper micron/crucial products than we do now!

 

I cannot wait for high speed 4tb nvme's to become even more affordable than they are now  

 

[NF-A12x25]

12 hours ago, grg994 said:

This is a very obvious and bold lie. Micron makes DRAM and NAND flash which are passive components, they don't run code or do any logic.

politicians don’t know that tho, they’re just a bunch of old farts who don’t understand how computers work

[igormp]

12 hours ago, SorryClaire said:

The issue with it is simple: If they believe this was the case why dont go for the head? Intel was and is still currently the biggest semiconductor manufacturer in the world, making many form of integrated circuit which would have more logic than a DRAM.

They can easily replace Micron's products with other companies' ones while also strengthening relations with other countries (as mentioned in the OP, South Korea's Samsung and SK Hynix), whereas there would not be an easy replacement for CPUs.

[Brooksie359]

56 minutes ago, Donut417 said:

American companies are bracing for a recession. So Micron likely had plans in place for when the bottom of the economy drops out. Also Micron is an American Semi conductor company, the government isnt going to let them fail. We need them too bad. 

Ah yes that is what matters is that the company doesn't go bankrupt. I mean nobody would be effected negatively so long as they don't go bankrupt. It's not like many people could lose their jobs over this and negatively impact the economy.

[Donut417]

30 minutes ago, Brooksie359 said:

Ah yes that is what matters is that the company doesn't go bankrupt. I mean nobody would be effected negatively so long as they don't go bankrupt. It's not like many people could lose their jobs over this and negatively impact the economy.

The US and many areas of the world is in a recession. Regardless people will loose their jobs. The Federal Reserve wants unemployment over 4%, in their eyes that the only way to combat inflation. The only reason the economy is tucking along for the most part is because consumer spending is still high. But many who work in tech are getting laid off. Once consumer spending dries up then the rest of the economy will join the rest in the recession. 

[Taf the Ghost]

My standard disclaimer that I still don't know what Huawei did, but they managed to be the single unifying force in American politics in the last half century. They did/were used for something that pissed off the entirety of the 5 Eyes Alliance. 

 

That said, did Micron start making Network equipment I didn't know about?

 

https://www.micron.com/products/advanced-solutions/authenta

https://www.micron.com/products/advanced-solutions/advanced-computing-solutions

 

https://www.reuters.com/technology/chinas-regulator-says-finds-serious-security-issues-us-micron-technologys-2023-05-21/

 

So, China hasn't said which actual network bits aren't allowed, Micron apparently doesn't know either and this probably doesn't effect Memory products? The Authenta product line is likely the culprit, and it probably won't effect Micron that much. This was more of a headline/politics play for China than anything else.

 

That said, NSA has been known to have planted employees at different tech companies going back to at least the 1960s. So, you never know if there isn't the occasionally nefariously planted aspect into an export product. The legendary one is the exploding gas pipelines in the 1980s during the Cold War.

 

[thechinchinsong]

Did nobody read the articles? The ban seems to only be on Micron products in key infrastructure projects which shouldn't translate much into the memory market. Micron doesn't really rely on the Chinese government itself or networking infrastructure as the main generators in income within China. I'd be happy about a memory ban since that might mean cheaper micron NAND/DRAM elsewhere, but unfortunately that doesn't seem to be the case.

43 minutes ago, Taf the Ghost said:

That said, did Micron start making Network equipment I didn't know about?

 

So, China hasn't said which actual network bits aren't allowed, Micron apparently doesn't know either and this probably doesn't effect Memory products? The Authenta product line is likely the culprit, and it probably won't effect Micron that much. This was more of a headline/politics play for China than anything else.

Agree with this here, its still a political ban more than anything, but it does at least have a modicum of sense if it were related to networking equipment. It would share a similar reason with the US or other Western governments banning Huawei.

[SorryBella]

3 hours ago, igormp said:

They can easily replace Micron's products with other companies' ones while also strengthening relations with other countries (as mentioned in the OP, South Korea's Samsung and SK Hynix), whereas there would not be an easy replacement for CPUs.

exactly as i say that this whole thing is a piss competition done by China. While US is actually serious in seeing china as a geopol threat.

 

But yeah thats getting close to political that would violate CS.

[Brooksie359]

5 hours ago, Donut417 said:

The US and many areas of the world is in a recession. Regardless people will loose their jobs. The Federal Reserve wants unemployment over 4%, in their eyes that the only way to combat inflation. The only reason the economy is tucking along for the most part is because consumer spending is still high. But many who work in tech are getting laid off. Once consumer spending dries up then the rest of the economy will join the rest in the recession. 

You don't necessarily need unemployment to be high to decrease spending. I mean there are times where just the fact that there is uncertainty and fear has resulted in much lower consumer spending. The issue is that tends to lead to a recession and thus we end up with higher unemployment regardless. Also its not like there isn't another way to decrease inflation. Just increase supply and the prices will go down. Granted that isn't really going to happen as no business would do that unless they thought that they could make more by selling higher quantities. Also capacity issues are another issue where some places wouldn't be able to increase supply without expanding their business. 

[williamcll]

6 hours ago, TrigrH said:

more the reason not to ban them, let them eat the garbage food haha  

I think we will end up seeing even cheaper micron/crucial products than we do now!

 

I cannot wait for high speed 4tb nvme's to become even more affordable than they are now  

 

But will Micron let themselves become this cheap. As far as it goes they are still worse with price compared to Hitai, patriot or even Samsung sometimes.

[Ydfhlx]

20 hours ago, grg994 said:

This is a very obvious and bold lie. Micron makes DRAM and NAND flash which are passive components, they don't run code or do any logic.

So what? Everyome knows this wasn't the reason anyways. It's all global (geo)politics.