China hits cybersecurity probe on largest US chip maker Micron
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The largest memory chip manufacturer in the US, Micron Technology Inc., has been the subject of a cybersecurity probe by China, which could exacerbate existing trade tensions between the two nations.
The evaluation, which aims to protect national security and ensure the integrity of China's information infrastructure supply chain, might jeopardize Micron's attempt to rebound after a trying year, according to a Bloomberg article published on Friday.
"Obviously, China has been investing aggressively to build out its own semiconductor ecosystem, and where we think about areas where they can be most successful, memory is one of them," said Abhinav Davuluri, equity strategist at Morningstar.
"This seems more political in nature than anything, a rebuttal to recent US actions. In terms of specific security risks for the products sold by Micron, I'm skeptical there's anything there."
Almost 11% of Micron's sales come from China, and its stock dropped as much as 5.1% to $59.90 in New York.
The Chinese chipmaker Fujian Jinhua Integrated Circuit Co., which Washington placed on a blacklist more than four years ago on suspicion of economic espionage and conspiring to steal trade secrets from Micron, has been the subject of an espionage investigation involving Idaho-based Micron.
The Chinese government perceives Micron as "playing a negative role" in the country's technology industry, as per a South China Morning Post (SCMP) report on Sunday quoting Wang Lifu, an analyst at Shanghai-based semiconductor research firm ICwise.
"There is some speculation that Micron was behind efforts to push the US government to impose sanctions against China," said Lifu.
US-China tech war
Washington has already placed Chinese tech companies on a blacklist, stopped the delivery of advanced processors, and forbade citizens from aiding China's semiconductor industry.
Since Huawei Technologies Co. is viewed as a national security danger with connections to the government, the US has enacted tight export prohibitions on semiconductor technologies to China.
With the demise of larger firms like Intel Corp. and Texas Instruments Inc. due to severe industry downturns, Micron is the lone US-based manufacturer of computer memory.
Compared to its competitors, Micron has a relatively low level of exposure to China and does not rely heavily on it as a manufacturing hub.
Less than half of Micron's rival SK Hynix Inc.'s sales come from China. Even while the small footprint should protect Micron from any negative effects, supply chain issues could potentially get worse.
If China's cybersecurity examination results in a restriction on the firm selling to China, Micron's situation might get worse, according to the Bloomberg report.
"The biggest issue for Micron has been the global softness in consumer device sales," said James Kelleher, an analyst at Argus Research Group.
"As that market recovers, it's conceivable, if Micron were proscribed from selling to China, that they could make up lost sales in other markets. But it would affect them."
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