US-based Micron Technology on Monday estimated its revenue to be hit in the low-single to high-single digit percentage after China imposed a ban on sales of its memory chips to major domestic industries in the Sino-US trade dispute. Is the latest.
China’s cybersecurity regulator said late Sunday that Micron, the largest US memory chip maker, has failed its network security review and that it would block major infrastructure operators from purchasing from the company.
It did not provide details on what risks it had found or which company products would be affected.
Analysts said they saw limited direct impact on Micron because most of its major customers in China are consumer electronics players, but warned that the move could lead some companies to rid the supply chain of Micron products due to political risks. Could.
Micron Chief Financial Officer Mark Murphy said at a conference on Monday that it was not clear what concerns Beijing and that direct and indirect sales to China-headquartered companies provide about a quarter of the chip maker’s revenue.
“We are currently estimating a range of impacts in the low single-digit percentage of our total company revenue on the low end and high single-digit percentage of total company revenue on the high end,” Murphy said.
The comments helped Micron shares pare losses, sending the stock down 3.4 percent after falling as much as 6 percent in premarket trading.
Beijing’s decision was opposed by Washington but it helped shares of Micron’s rivals in China and South Korea, which appear to be benefiting from mainland companies seeking memory products from other sources.
“We strongly oppose sanctions that have no basis in fact,” a U.S. Commerce Department spokesperson said Sunday.
“This action, along with recent raids and targeting of other US firms, is inconsistent with (China’s) claims that it is opening its markets and is committed to a transparent regulatory framework.”
Tensions between Washington and Beijing have risen in recent months following raids and visits by Chinese authorities to US corporate due diligence firm Mintz Group and management consultancy Bain.
Micron is the first US chip maker to be targeted by Beijing following a series of export controls by Washington on some American components and chip manufacturing equipment to prevent their use to advance China’s military capabilities.
China launched the review in late March amid a dispute over chip technology and worsening relations between Washington and Beijing.
The move comes shortly after the Group of Seven countries agreed to “de-risk, not de-escalate” economic ties with China and US President Joe Biden called for an “open hotline” between Washington and Beijing Was.
The US Commerce Department said it would speak directly to officials in Beijing to clarify its actions.
“We will also engage with key allies and partners to ensure that we are closely coordinated to address the distortions to the memory chip market caused by China’s actions,” the department said.
While Chinese statements and state media said Micron’s decision should be viewed as an individual matter in the context of national security concerns rather than geopolitics, prominent Chinese commentator Hu Zijin made a different comment.
The former editor-in-chief of nationalist state tabloid Global Times tweeted, “Washington itself encourages American companies to do things that threaten China’s national security, so it suspects Chinese companies are doing the same.” Are.” “The whole world should be wary of America.”
Michael Hart, president of the American Chamber of Commerce in Beijing, said the ban has created uncertainty for American companies operating in China.
Hart said, “Members are asking us two things: will they be targeted because they are American, and how can they ensure they remain compliant in a business environment that is increasingly affected by national security concerns?” “Does it seem to be happening?”
Other US chipmakers with big investments in China, such as Qualcomm, Intel and Broadcom, declined about 1 percent.
Chinese chip stocks rise
China’s announcement on the Micron review helped boost shares in some local chipmaking-related firms, as state media reported domestic players could benefit from the move.
Shares of companies including Gigadevice Semiconductor, Ingenic Semiconductor and Shenzhen Kaifa Technology opened between 3 percent and 8 percent higher before paring gains.
Shares of Micron’s key rivals also saw gains, with South Korea’s Samsung Electronics and SK Hynix rising 0.9 percent and 2.1 percent, respectively. They later pared gains and closed up 0.2 percent and 0.9 percent, respectively, as analysts expect limited impact on Micron.
Both Samsung and SK Hynix did not comment.
“Since Micron’s DRAM and NAND products are very limited in servers, we believe the majority of its revenue in China is not generated from telecom companies and the government. The ultimate impact on Micron will be quite limited,” Jefferies said.
Bernstein said a 2 percent decline in sales is the most realistic estimate, because Micron’s exposure to the enterprise and cloud server segments is relatively small.
Beijing has broadly defined the industries it considers “critical” such as public communications and transportation, but has not specified what types of businesses these apply to.
China, the world’s biggest semiconductor buyer, has gradually reduced its reliance on foreign-made chips in a multi-year campaign to boost its self-reliance.
© Thomson Reuters 2023
