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Mayank Vikash
Mayank Vikash

Posted on • Originally published at mayankvikash.in

China bans US chip manufacturer

Chinese authorities have recently banned the American chip manufacturer Micron Technology, Inc. Cyberspacespace Administration of China made the decision.

The cyberspace regulator announced on Sunday, 21st May 2023, that America’s biggest memory chips manufacturer Micron poses “serious network security risks”.

The ban on Micron by China is one of the biggest ironies of 2023. China takes serious action when it thinks there is a violation of its national security and sovereignty, but what about other countries? In Chinese diplomacy, sending troops to other countries areas is not a violation of its territorial integrity, using social apps to collect data from rival countries is not a violation of their privacy and sending spy balloons to other countries’ airspace is not a violation of their national security.

Micron Technology, Inc is an American microchip and storage devices manufacturer based in Boise, Idaho.

The firm will see a significant impact on its revenue after its product ban in the second largest economy.

China is one of the biggest markets for Micron. The company generated around 10% of its annual sales. In 2022, Micron reported total revenue of $30.7bn (£24.6bn), of which $3.3bn came from mainland China.

The Cyberspace Administration of China said, “The review found 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”, in a statement.

It did not state what risks Micron poses or provide evidence to support its claims.

The ban on Micron is the latest development in the deepening rivalry between Bejing and Washington.

The US regulators have opposed the decision by Chinese authorities.

“We firmly oppose restrictions that have no basis. This action, along with recent raids and targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework,” a US Commerce Department spokesperson said.

Chinese authorities have banned Micron from selling its products to firms handling critical information and technology.

Micron primarily provided chips for smartphones and computers in China. They do not pose any risks to China’s national security, and there is no evidence from China to back its claims. This ban, out of many, is an indirect warning to Western countries while they have gathered for the Group of Seven (G7) summit.

What may be the potential reason?
The US is taking every step to prevent China from controlling the supply chain of Semiconductor Technology. The supply chain includes the manufacturing of advanced semiconductors chips to their sales throughout the world.

Currently, Taiwan’s TSMC is the largest manufacturer of advanced silicon ships. China depends on TSMC for it 70% of its chip imports.

The US Government has restricted American companies from providing critical technologies to China. It has also asked the allies to do so.

The US Government has also restricted the sales of advanced chips to China. This step prevents China from making more advanced military equipment, notably drones and naval ships. China has yet to develop advanced semiconductor technologies and is far behind the US.

China produces semiconductors in large quantities, but it lacks the critical technology of advanced chips. India has fewer manufacturing plants than China, but that didn’t stop it from technologies that catch China.

Indian Government is working to set up new manufacturing plants. India plans to be a semiconductor hub and a key player in the supply. The US and other Western nations, including Japan, South Korea and European Union, are supporting India with foreign direct investments of over $25 billion to prevent China from controlling the supply chain.

Now back to the main question, why China banned Micron just a day after the G7 summit in Japan, which India too attended as a special guest?

China and the Ukraine war were the main focus of this year’s G7 summit. China is becoming a concern for the G7 since its rivalry with the US is increasing.

The G7 nations, in a joint statement this year, criticized China for its economic coercion, debt traps and violating the sovereignty of other countries.

China did not like this. The ban on Micron is probably a message to the US and Taiwan that China is becoming independent in semiconductor technology and chip manufacturing. China dreams of controlling the supply chain of silicon chips, but is it even capable of fulfilling its own need for silicon chips? The answer at present is no, but not for a long time.

China is investing billions of dollars to develop its semiconductor industry. It is a big concern for the US as China could use its dominance in the semiconductor market for economic benefits, as it is using its supremacy over most of the crucial supply chain now to put pressure on Japan, Australia and even the US and European Union.

The solution? The US can use India’s skilled engineers and inexpensive lands to produce advanced silicon microchips. India is the best option if the US wants to counter the rising China. It is safer to let India dominate the supply chain of critical technologies.

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