In the latest move in the retaliatory tech trade war between the US and China, on Sunday China Cyberspace Administration In the future, it has announced that it will effectively ban the purchase of Micron products in Japan. The government has ordered major infrastructure operators to stop buying products with the US-based company’s chips, citing Micron’s products failing cybersecurity screening requirements.
“After the review, Meiguang products have serious hidden dangers of network security problems, which pose serious security risks to China’s key information infrastructure supply chain and affect China’s national security. It turned out,” he said. statement Read by CAC. “Therefore, the Cyber Security Review Office has concluded that it will not pass the network security review in accordance with the law. Under the Cyber Security Law and other laws and regulations, operators of major information infrastructure in China have stopped purchasing Micron’s products. “Should” products. “
The CAC statement did not elaborate on the nature of the “hidden dangers” or the risks they pose. In addition, the agency did not elaborate on which companies are considered “major information infrastructure operators,” but these include telecommunications companies, government agencies, and socially important customers. It can be inferred that it is the cloud data center that provides it, and various other entities that are considered important. For society and industry.
For U.S.-based Micron, the Chinese market as a whole is small, but not too small to ignore. China and Hong Kong account for about 25% of Micron’s sales, and any decline in sales is expected to affect Micron’s financials.
“As disclosed in our filings, companies headquartered in China and Hong Kong account for a significant portion of our revenue,” Micron Chief Financial Officer Mark Murphy said at the 51st JPMorgan Global Technology, Media and Communications Conference. It’s about 16%,” he said. “In addition, we also have agents who sell to companies headquartered in China. Direct and indirect sales through agents to companies headquartered in China together account for about a quarter of our total revenue. We estimate that it will be one of the
Trade war implications aside, it’s not yet clear how far Micron’s ban would extend under the government order’s “critical information infrastructure” language. In particular, whether Micron products will continue to be allowed to be imported as consumer goods. Many of Micron’s Chinese customers assemble PCs, smartphones and other consumer electronics that are sold around the world, so the potential impact on Micron’s sales as long as they can continue to use Micron parts. could be significantly lower than 25% of revenue.
“We are considering what portion of our revenue may be impacted by the ban on critical information infrastructure,” Murphy added. “We are currently estimating a range of impacts in the low-single digit percentage of our total revenue on the low-end and in the high-single-digit percentage of our overall revenue on the high-end.”
The CAC’s decision comes after the U.S. government banned Chinese chip makers from purchasing advanced wafer fabrication equipment, which would have significant implications for China-based SMIC and YMTC, and the U.S. government It came years after China implemented regulations that would substantially drive one of China’s emerging nations. DRAM maker goes out of business. Officially, it is an unanswered question whether the CAC’s decision was influenced by the US government’s sanctions against Chinese companies, but it is certainly unprecedented in a recent row between the two countries amid an ongoing trade war. It’s not that.
source: micron, Reuters, looking for alpha, CAC.
