US Voices “Serious Concerns” Over China’s Micron Ban, Korean Chipmakers Caught In Middle

The US has voiced “serious concerns” about China’s ban of US chipmaker Micron, while competitors Samsung and SK Hynix are weighing up the path of least political resistance.

The US Department of State says the decision to impose sales restrictions of Micron components across numerous infrastructure industries in China is inconsistent with the country’s claim “that it is open for business and committed to a transparent regulatory framework.”

The Cyberspace Administration of China ruled yesterday that “Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security.”

The CAC has banned Micron from its critical information infrastructure, but hasn’t yet released details of which products would be banned, or any clearer reasoning behind the ban.

Micron said of the decision: “We are evaluating the conclusion and assessing our next steps.We look forward to continuing to engage in discussions with Chinese authorities.”

This ban came hours after U.S. President Joe Biden announced G7 nations had agreed to “de-risk and diversify our relationship with China” and was therefore seen as a stress test of this pledge.

Korean chipmakers Samsung and SK hynix have been caught in the crosshairs of both nations as they negotiate what is best to next do: leap in and fill the production and supply gaps left in China’s network by its Micron ban and risk angering the US, or refuse to fill orders and anger Beijing.

According to Trendforce data, Samsung held 40.7 per cent of the dynamic random-access memory chips market, while SK hynix commands 28.8 per cent. Micron is the third-largest DRAM chips producer, with 26.4 per cent of the market.

 

Mark Li, an analyst with Sanford C. Bernstein, told Nikkei Asia its almost certain China will approach the two big South Korean chipmakers to address the shortfall that the Micron ban would pose.

What’s less certain is whether these South Korean companies would risk their ties to the US for a profit leap.

“As China’s domestic memory suppliers are not competitive in [terms of] technologies and capacity, China would need to resort to Samsung, SK Hynix, Kioxia, Western Digital or other foreign suppliers as the alternative to Micron,” Li said.

“However, these are all from countries of US. allies, and all rely on the equipment exported from US. suppliers.

“We think the chance that [these foreign memory chipmakers] ignore the US. pressure and take a large advantage of the ban on Micron to gain shares in China is low.”

China’s Foreign Ministry on Monday issued a statement pointing out that any export controls by Korean companies “seriously violate the principles of market economy and international economic and trade rules, and undermine the stability of the global production and supply chain.

“We firmly oppose this practice.”