Tensions between the US and China have been escalating in recent months, with Beijing’s move to bar US firm Micron Technology Inc from selling memory chips to key domestic industries ramping up the trade spat. China’s cyberspace regulator said late on Sunday that Micron, the biggest US memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company.
Analysts said they saw limited direct impact on Micron, as most of its key customers in China are consumer electronics players, but warned the move could prompt some companies to rid their supply chains of Micron products due to political risks. The US Commerce Department said it firmly opposed the restrictions and would engage with key allies and partners to address distortions of the memory chip market caused by China’s actions.
Shares in companies including Gigadevice Semiconductors, Ingenic Semiconductor, Shenzhen Kaifa technology opened up between 3% and 8% on Monday, as state media reported that domestic players could benefit from the move. Micron’s major rivals also saw their shares gain, with South Korea’s Samsung Electronics and SK Hynix up 0.9% and 2.1%, respectively. Analysts expect limited impact on Micron, as its exposure to the enterprise and cloud server segment is relatively small.
China has gradually reduced its reliance on foreign-made chips in a multi-year campaign to boost its self-sufficiency. The US Commerce Department said it would speak directly with authorities in Beijing to clarify their actions.