China’s government has urged users of computer equipment that is deemed sensitive to stop buying products from Micron Technology Inc. This move is seen as China’s way of escalating the feud over technology and security with the United States. The Cyberspace Administration of China has stated on its website that Micron’s products have unspecified “serious network security risks” that cause hazards to China’s information infrastructure and affect national security. The agency has issued a six-sentence statement without providing any details. It has instructed the “operators of critical information infrastructure in China to stop purchasing products from Micron Co.”
Unspecified Consequences For Micron
The United States, Europe, and Japan have started reducing Chinese access to advanced chipmaking and other technology, citing that the technology might be used in weapons. President Xi Jinping’s government has threatened to attack Taiwan, and there is an increasing assertion towards Japan and other neighbors. Chinese officials have warned of unspecified consequences, but they seem to be finding it difficult to retaliate without hurting China’s smartphone producers and other industries, and its efforts to develop its processor chip suppliers.
Micron’s official review under China’s increasingly stringent information security laws was announced on April 4, hours after Japan joined Washington in imposing restrictions on Chinese access to technology to make processor chips on security grounds. Foreign companies have been rattled by police raids on two consulting firms, Bain & Co., and Capvision, and a due diligence firm, Mintz Group. Chinese authorities have declined to explain the raids but said foreign companies are obliged to obey the law.
Impact on Foreign Companies
Business groups and the US government have appealed to authorities to explain newly expanded legal restrictions on information and how they will be enforced. The latest announcement by China appears to be an attempt to reassure foreign companies. The cyberspace agency has stated that “China firmly promotes high-level opening up to the outside world and, as long as it complies with Chinese laws and regulations, welcomes enterprises and various platform products and services from various countries to enter the Chinese market.”
Despite China’s statement of openness to the outside world, Beijing has been slow to retaliate, possibly to avoid disrupting Chinese industries that assemble most of the world’s smartphones, tablet computers, and other consumer electronics. They import more than $300 billion worth of foreign chips every year. Beijing is pouring billions of dollars into trying to accelerate chip development and reduce the need for foreign technology. Chinese foundries can supply low-end chips used in autos and home appliances but can’t support smartphones, artificial intelligence, and other advanced applications.
The conflict has prompted warnings that the world might decouple, or split into separate spheres with incompatible technology standards that mean computers, smartphones, and other products from one region wouldn’t work in others. That would raise costs and might slow innovation. The US-Chinese relations are at their lowest level in decades due to disputes over security, Beijing’s treatment of Hong Kong and Muslim ethnic minorities, territorial disputes, and China’s multibillion-dollar trade surpluses.
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