China bans chip maker Micron from key infrastructure projects

A network security review of Micron products sold in China has revealed that these products pose a significant security risk to the country's key information infrastructure supply chain, according to the Cyberspace Affairs Commission of China.

Micron is a US memory chip giant that produces computer memory and computer data storage including dynamic random-access memory, flash memory, and USB flash drives. The Chinese authorities have not mentioned which Micron products are banned, what kind of security risk they pose, nor what would happen to existing Micron products that are already in use.

"The review found that Micron's products have more serious cybersecurity problems and pose significant security risks to China's critical information infrastructure supply chain, affecting China's national security," according to a machine translation of a Cyberspace Affairs Commission of China statement.

The statement added that for this reason, the Network Security Review Office has concluded that the network security review should not be passed.

"According to the Network Security Law and other laws and regulations, operators of critical information infrastructure in China should stop purchasing Micron products," the Commission said in the statement.

The purpose of this network security review of Micron's products was to prevent product network security issues from endangering the security of the country's key information infrastructure, which is a necessary measure to maintain national security, according to a statement by the Commission on March 31.

The move by China could be considered as the first step of retaliation, after several other countries banned the import of Chinese hardware due to security concerns. Countries such as the UK and Sweden have imposed bans on hardware products from China. Germany is still scrutinizing the use of Chinese equipment in its major carrier networks.

US and Micron respond

After the announcement by China, the US Commerce Department released a statement stating it opposes the restriction as it has no basis.

"We have seen the announcement by the People's Republic of China (PRC) regarding Micron. We firmly oppose restrictions that have no basis in fact," a Commerce Department spokesperson said in a statement, shared by journalists on Twitter.

This action, along with recent raids and targeting of other American firms, is inconsistent with the PRC's assertions that it is opening its markets and committed to a transparent regulatory framework, the statement said.

"We will engage directly with PRC authorities to detail our position and clarify their action. We also will engage with key allies and partners to ensure we are closely coordinated to address distortions of the memory chip market caused by China's actions," the statement said.

A Micron representative told, "We have received the CAC's notice following its review of Micron products sold in China. We are evaluating the CAC's conclusion and assessing our next steps. We look forward to continuing to engage in discussions with Chinese authorities."

The latest announcement by China intensifies the ongoing semiconductor trade dispute that is disrupting the chip supply chain.

The ongoing semi-conductor trade dispute

There have been a series of measures, taken by the US presidential administrations of Joe Biden and Donald Trump, that barred the use of Chinese-made hardware in US networks and imposed export controls to keep the latest computing technology out of China's hands.

In October, the Biden administration issued export controls that block US companies from selling advanced semiconductors and equipment to certain Chinese manufacturers unless they receive a special license.

In December, the restrictions were expanded to include 36 additional Chinese chip makers from accessing US chip technology, including Yangtze Memory Technologies Corporation (YMTC), the largest contract chip maker in the world. The Biden administration stated that the purpose of the restrictions was to deny China access to advanced technology for military modernization and human rights abuses.

In March, the Netherlands government announced it is moving forward with plans for new restrictions on exports of advanced chip-making technology to China.

Nations bolster chip manufacturing capabilities

With the restrictions in place and several countries imposing similar restrictions, nations are now bolstering chip manufacturing capabilities internally.

Earlier this month, the UK government unveiled its 10-year strategy for supporting the country's semiconductor industry, which includes £1 billion ($1.24 billion) in investments to drive research and development efforts and shore up the industry's talent pipeline.

The US and India also signed a memorandum of understanding on establishing a semiconductor supply chain, which could be an opportunity for both nations to reduce global dependency on China.

In July, the US Senate, approved the CHIPS Act, a bill that would provide $52 billion in assistance funds for semiconductor manufacturers looking to make products in the US, along with a 25% tax credit for investment in the industry, as well as research and workforce development grants. China itself is pouring in $143 billion to boost its domestic chip manufacturing in the face of the trade restrictions.