As a result of Micron's failure to pass a security review, the Chinese government has banned the company from supplying memory chips to local industries that are critical to the country.
The Chinese cyberspace regulator has announced that it will bar operators of key infrastructure from buying products made by American memory chipmaker Micron Technology Inc. (MU.O). Micron Technology Inc. is an American memory chip maker with international reach.
Washington is looking to cut off Beijing's access to the most advanced semiconductors to limit its access to the United States' advanced chip manufacturing facilities. Despite the ongoing chip war between the two nations, the probe represents the latest effort by investigators to escalate the crisis.
As a result of the incident, China tightened its enforcement of anti-espionage and national security laws, tightening its control over international espionage.
In a report by the news agency Reuters, the US government has instituted a series of export controls on certain American components and chipmaking tools to prevent them from being used to advance China's military capabilities, following a series of export controls by the USA on certain American components and chipmaking tools.
There was an additional phase in the bitter chip war between the United States and China. Washington was attempting to prevent Beijing from having access to top-of-the-line semiconductors and the latest technology.
Chinese authorities launched a review of Micron, one of the world's largest chip manufacturers, in March last year. This was following several complaints related to its products available in the country.
From transportation to healthcare, critical information infrastructure is broadly defined as the network infrastructure that supports the system of the country.
On Monday, shares in several local chipmaker-related companies rose as a result of the move. Shares in corporations including Gigadevice Semiconductors, Ingenic Semiconductors, and Shenzhen Kaifa Technology opened up by 3% to 8% on Monday, according to Reuters.
Based on Micron's financials for the year ended March 31, 2013, it was estimated that China contributed approximately 10 percent of Micron's USD 30.8 billion revenue.
It was unclear whether the cybersecurity watchdog's decision would affect sales to foreign customers since a large portion of Micron products sold in the country were purchased by foreign manufacturers, analysts said earlier. Even if the decision does affect sales, the effect may not be felt for some time.
Earlier this year, the Chinese government announced that it would pay more attention to protecting the critical infrastructure of its information systems by enforcing stricter data security regulations. There has been a recent intensification of its enforcement of its anti-espionage and data security laws, which have been implemented as well.
During the last year, China and the United States stepped up their chip war by imposing restrictions on Chinese access to high-end chips, chipmaking equipment, and software used in the design of semiconductors. Yangtze Memory Technologies Co Ltd, a rival of Micron, was also placed on a blacklist by the United States government.
Despite the high level of risk that the Chinese armed forces and intelligence services may possess technology that could be used in developing advanced military equipment, Washington cited national security concerns and insisted that it wanted to prevent the acquisition of such technology.
One of the largest chip manufacturers in the world, Micron, has been surveyed by Chinese authorities regarding products sold within the country by the company.
Based on the review, the Cyberspace Administration of China (CAC) concluded that Micron's products pose significant security risks to China's critical information infrastructure supply chain, affecting the safety and security of the country's key infrastructure, an influence that could adversely affect China's national security.
Several manufacturers of semiconductor technology equipment, such as the Netherlands and Japan, have recently announced new restrictions on the export of certain products, although neither of them named China as a major source of these restrictions.
There has been a lot of opposition from Beijing to Washington's controversial move, which Beijing has called "bully tactics" and declared as "technological terrorism", saying it is not only strengthening its resolve to self-sufficiency in the sector but also strengthening US business interests.
There have been billions of dollars invested in domestic chip companies over the past few decades by the Chinese government to build up a robust semiconductor industry domestically.
It is expected that by the year 2030, the chip industry in the world will generate a $1 trillion market, a figure that can be attributed to the fact that chips are the lifeblood of modern global economies, powering everything from cars to smartphones.
In response to the ban, the United States opposes it; Micron is committed to engaging in negotiations with China.
There was strong opposition to the Micron ban from the US Commerce Department.
A spokesperson for the Commerce Department said in a statement that "we strongly oppose restrictions that have no basis in fact." China claims that they are open to a transparent regulatory framework and that they are committed to a transparent regulatory framework, which contradicts this action, along with raids and targetings of other American firms that have been reported in the past.
It is now the department's responsibility to clarify the actions of the Chinese authorities in Beijing directly through direct communication with them.
Beijing, which is China's largest manufacturer of semiconductors, has been forbidden from buying cutting-edge semiconductors as part of the US-China trade dispute. It's the latest escalation between the two countries.
Despite Micron's review by the CAC, the company said it was looking forward to engaging with Chinese authorities in further discussions following its receipt of the review. The company said in a statement that it is evaluating the conclusion of the investigation and determining what we should do next.
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