China’s chip stocks rally after Beijing says Micron a ‘security risk’

Micron Technology double data rate synchronous random-access memory chip (SDRAM)

Tomohiro Ohsumi | Bloomberg | Getty Images

Chinese chip stocks rallied on Monday morning after Beijing announced it would ban some purchases of products from the US memory chip maker Micron.

China’s Cyberspace Administration has banned operators of ‘critical information infrastructure’ in China from buying products from the US chip giant following a security review by the China Cyberspace Administration.

Chinese authorities said Micron products failed their network security review and cited “serious potential network security issues.” The company poses a “major security risk” to China’s critical information infrastructure supply chain and affects [its] national security,” a statement read.

Shares of Chinese chipmakers rose broadly on Monday after the move: Hong Kong-listed Hua Hong Semiconductor rose 3.14% on Monday, while minimum wage increased by 2.64%.

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Other mainland Chinese memory chip makers such as GigaDevice Semiconductor and Ingenic semiconductor jumped 3.74% and 8.08% respectively.

In response to Beijing’s announcement, US Commerce Secretary Gina Raimondo told the Wall Street Journal, “We strongly oppose restrictions that have no basis in fact.” The Commerce Department will engage with the Chinese government to “detail” its position and seek further clarity, he added.

Raimondo said the United States would engage with key allies to address Beijing’s actions, and that such moves would “distort the memory chip market.”

It comes as the United States has reportedly urged South Korean chipmakers not to plug gaps in China if Beijing’s ban goes into effect, the The Financial Times reported.

Shares of South Korean chipmakers SK Hynix and Samsung Electronics, both rivals of Micron, rose on Monday morning.


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