The Semiconductor Battle: China’s Ban on Micron Explained

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Microchip Component

There’s been an ongoing battle in the electronics sector among world powers.

We’ll tell you all you need to know about China’s Micron ban and what is expected to come.

The Micron Ban Explained

The Cyberspace Administration of China (CAC) reported that Micron Technology failed to pass its cybersecurity review. This occurred shortly after the Group of Seven (G7) summit.

Moreover, G7 is a group of the following world powers and advanced democracies:

  1. The United States
  2. Canada
  3. France
  4. Germany
  5. Italy
  6. Japan
  7. United Kingdom

This group of world powers meets annually and, at times, quarterly to discuss rising issues.

According to the Council of Foreign Relations, they meet to discuss topics such as global economic governance, international security, and energy policy.

Furthermore, China made an official statement following the ban. The official statement from the Chinese security regulator is as follows:

“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.”

Notably, Chinese operators involved in “domestic critical infrastructure projects” must discontinue business with the brand. But, how will this affect the market?

Continue below to learn the alleged cause of the Micron ban and its impact on the global chip market.

The Alleged Cause of the Ban

The ban was announced seven weeks following the above-mentioned cybersecurity review. Consequently, it’s suspected that it was imposed in retaliation to sanctions created by Washington and its allies in the Chinese chip sector.

Micron says they “look forward to continuing to engage in discussions with Chinese authorities.”

According to Reuters, a spokesperson from the US Commerce Department issued a statement saying that they “firmly oppose restrictions that have no basis in fact.”

Furthermore, the department stated that “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.”

Lastly, China’s Foreign Ministry has accused G7 leaders of “hindering international peace” and suggested that the group “reflect on its behavior and change course.”

The Impact of the Ban on the Chip Market

According to CNN, shares of Micron Technology declined 6% in premature trading this Monday.

On the contrary, several other Asian rival companies experienced increases, seemingly as a result of the ban.

Ingenic Semiconductor 2.8
Shenzhen Techwinsemi Technology 6.3
Toyou Feiji Electronics 14%
SK Hynix 0.9 (which outperformed the South Korean market)

In Conclusion

Tensions between the US and China have been at an all-time high. The semiconductor battle has largely contributed to this divide between powers.

Unfortunately, tensions skyrocketed when a suspected Chinese spy balloon was detected by the US military in February. It was then shot down by US fighter jets. (During this time, Beijing had also strengthened its relationship with Russia, despite their invasion of Ukraine.)

According to US President Joe Bidden, relations between the US and China will improve soon. President Biden stated, “We are not looking to decouple from China. We are looking to de-risk and diversify our relationship with China.”

Hopefully, the nations will come to an agreement soon.

We advise you to keep up to date with the outcomes of any further G7 meetings as well as future presidential addresses regarding US relations with China.

With so many world powers involved in next decisions, it’s difficult to predict what will happen next.

If the involved nations can resolve concerns of cybersecurity and economic coercion, the ban may be lifted soon.

For now, stay tuned for more information on the state of the electronics industry. You can trust iBuyXS to give you the updates that matter.

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