In the latest move in the retaliatory technology trade war between the United States and China, the China Cyberspace Authority announced on Sunday that it would effectively ban future purchases of Micron products in the country. The government has ordered major infrastructure operators to stop buying products with the US-based company’s chips, citing Micron’s products failing cybersecurity screening requirements.
The CAC said in a statement, “We found that Meiguang products harbor serious hidden dangers of network security problems. This poses a serious security risk to China’s major information infrastructure supply chain. It affects national security.” “Therefore, the Cyber Security Examination Office concluded that it would not pass the network security examination in accordance with the law. Under the Cyber Security Law and other laws and regulations, operators of major information infrastructure in China have stopped purchasing Micron’s products. “Should” products. “
The CAC statement did not elaborate on the nature of the “hidden dangers” or the risks they pose. In addition, the agency did not elaborate on which companies are considered “major information infrastructure operators,” but these include telecommunications companies, government agencies, and socially important customers. It can be inferred that it is the cloud data center that provides it, and various other entities that are considered important. For society and industry.
For U.S.-based Micron, the Chinese market as a whole is small, but not too small to ignore. China and Hong Kong account for about 25% of Micron’s sales, and any decline in sales is expected to affect Micron’s financials.
“As disclosed in our filings, companies headquartered in China and Hong Kong account for a significant portion of our revenue,” Micron Chief Financial Officer Mark Murphy said at the 51st JPMorgan Global Technology, Media and Communications Conference. It’s about 16%,” he said. “In addition, we also have agents who sell to companies headquartered in China. Direct sales through agents and indirect sales to companies headquartered in China together account for about a quarter of our total revenue. We estimate that it will be one of the
Trade war implications aside, it’s not yet clear how far Micron’s ban would extend under the government order’s “critical information infrastructure” language. In particular, whether Micron products will continue to be allowed to be imported as consumer goods. Many of Micron’s Chinese customers assemble PCs, smartphones and other consumer electronics that are sold around the world, so the potential impact on Micron’s sales to the extent Micron parts can continue to be used. could be significantly lower than 25% of revenue.
“We are considering what portion of our revenue may be impacted by the ban on critical information infrastructure,” Murphy added. “We are currently estimating a range of impacts in the low-single digit percentage of our total revenue on the low-end and in the high-single-digit percentage of our overall revenue on the high-end.”
The CAC’s decision comes after the U.S. government banned Chinese chip makers from purchasing advanced wafer fabrication equipment, which would have a significant impact on China-based SMIC and YMTC, as the U.S. government It came years after China implemented regulations that would substantially drive one of China’s emerging nations. DRAM maker goes out of business. Officially, it is an unanswered question whether the CAC’s decision was influenced by the US government’s sanctions against Chinese companies, but it is certainly unprecedented in a recent row between the two countries amid an ongoing trade war. It’s not that.
Source: Micron, Reuters, SeekingAlpha, CAC.
