China Pushes Back Against US Chip Maker Despite Promise of Openness

China Pushes Back Against US Chip Maker Despite Promise of Openness

The Lede: China is set to conduct a cybersecurity review of Micron Technology, a leading U.S. chip manufacturer, over the security of the information infrastructure supply chain. The decision comes amid Beijing’s statements on opening doors “wider and wider” for foreign businesses and is viewed as the most significant form of retaliation against Washington's efforts to restrict China's access to high-end chips.

What we know:

  • The announcement from Beijing came the same day as Japan, a U.S. ally, declared that it would restrict the export of advanced chip manufacturing equipment to some countries, including China, following similar curbs imposed first by the United States in October and later by the Netherlands in March. China has strongly criticized these efforts, urging Japan to correct restrictions.
  • In the review of Micron, the Cyberspace Administration of China (CAC) is focused on “ensuring the security of key information infrastructure supply chains, preventing cybersecurity risks caused by hidden product problems, and maintaining national security.”
  • Mao Ning, a spokeswoman for the Chinese Foreign Ministry, referred to the review as a routine regulatory action, centered on Micron’s products that could pose a threat to national security. Micron, which produces memory chips utilized in various electronic devices such as phones, computers, data centers, automobiles, and other related equipment, said it is fully cooperating with the authorities and continues work as usual.
  • Micron’s shares have dropped by 9% after the news which, on the other hand, was well received by investors in China and caused a surge in the stock prices of domestic semiconductor companies.

The background: Idaho-based Micron has a long-standing history with China that dates back to 2007 when the company opened its first factory in Xi’an, the capital of Shaanxi Province in central China. But lately, Micron has been investing in expanding its global manufacturing capabilities, including building a new chip plant in the U.S., as part of its strategy to maintain a leading position in the global semiconductor industry and possibly, reduce dependence on the Chinese market amid an escalating trade war between two economic giants. According to the New York Times, mainland China's share of Micron's sales was approximately 11% in 2022, a significant decline from about 50% five years ago. Micron warned investors in its latest earnings report in March that it could face restrictions from the Chinese government, preventing it from participating effectively in the Chinese market or competing with Chinese companies.

To address its economic challenges after years of strict zero-COVID policy and create job opportunities, Beijing wants to attract foreign investments. The newly appointed Premier Li Qiang and other top economic officials have made multiple announcements pledging to offer a favorable business environment and services. But, at the same time, Beijing has been increasing its pressure on foreign companies to align with its economic and political agenda. CNN reported that Chinese authorities took action last month against U.S. corporate intelligence firm Mintz Group by closing its Beijing office and detaining five local staff members. Deloitte's operations in Beijing were also suspended for three months, and the company was fined $31 million for allegedly failing to meet auditing standards in its work for a state-owned distressed debt manager.

Likely outcomes/Takeaway:

  • China’s decision to conduct a cybersecurity review of Micron Technology acts both as a warning for foreign firms and a message for the U.S. and its allies. It suggests that the Chinese government is taking a more assertive approach towards protecting its domestic semiconductor industry and reducing its dependence on foreign technology – all of that in the midst of intensified trade war with the U.S. and news on allies imposing similar restrictions as Washington.
  • Other foreign businesses in the semiconductor industry that rely on the Chinese market may face similar risks and challenges, including possible cybersecurity reviews and competitive threats from state-funded Chinese semiconductor competitors.


  • “The Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.” – Micron’s March report.
  • “No matter how the international situation changes, China will unswervingly expand its opening up to the outside world.” – China’s new Premier, Li Qiang.
  • “This move further helps the American people see China for what it is — an aggressor and a bully that was never interested in true economic partnership.” – Senator Jim Risch, a Republican from Idaho.

Good Reads:

China Strikes Back at U.S. Chip Maker Even as It Signals Openness (The New York Times)

China escalates tech battle with review of US chipmaker Micron (The Financial Times)

Micron Technology: China probes US chip maker for cybersecurity risks as tech tension escalates (CNN)