UPDATED 20:25 EDT / MAY 28 2023


US slams China’s ban on buying Micron chips as ‘economic coercion’

U.S. Commerce Secretary Gina Raimondo said late Saturday that her country “won’t tolerate” China’s recent ban on the purchase of memory chips from Micron Technology Inc. and added that the U.S. government is working closely with its allies to counter what she termed “economic coercion.”

Raimondo (pictured) was speaking at a news conference after a meeting of trade ministers in the U.S.-led Indo-Pacific Economic Framework discussions, where she said the U.S. “firmly opposes” China’s moves against Micron.

China’s actions “target a single U.S. company without any basis in fact,” Raimondo said. “We see it as plain and simple economic coercion and we won’t tolerate it, nor do we think it will be successful.”

Her comments followed a May 21 announcement by China’s cyberspace regulator that Micron, the biggest maker of memory chips in the U.S., had failed a network security review. “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,” the Cyberspace Administration of China said in a statement.

As a result, the regulator said, it will block operators of key infrastructure in China from buying Micron’s products. That prompted Micron to warn investors it expects to see a significant reduction in its revenue.

China’s announcement was its first major move against a U.S. chipmaker, and it came at a time of increased tension between Beijing and Washington.

The two countries have been engaged in a long-running row over technology, with the U.S. voicing fears that China may be using its most advanced computer chips to power military applications. As a result, the U.S. has imposed a series of measures against China, preventing it from importing the most sophisticated chips and also targeting its domestic chipmaking industry. At the same time, the U.S. has been investing billions of dollars to boost its own semiconductor manufacturing industry.

China is a key market for Micron, generating about 10% of its full-year revenue. In its fiscal 2022 year, Micron reported total sales of $30.7 billion, of which $3.3 billion came from China.

Raimondo told reporters she raised her concerns in a Thursday meeting with China’s commerce minister, Wang Wentao. The meeting was part of a broader effort by President Joe Biden’s administration to restore high-level discussions with Beijing, including the prospect of direct talks between Biden and Chinese President Xi Jingping.

At the same time, the U.S. has said it is engaging with its international partners on how to respond to China’s Micron ban. As part of these efforts, it has reportedly urged South Korea not to make up any shortfall. South Korea is a major trading partner of China and has now found itself stuck in the middle, with its chipmakers Samsung Electronics Co. and SK Hynix Inc. both poised to gain from Micron’s loss of market share.

Wang said in a statement over the weekend that he had already met with South Korea’s trade minister Ahn Duk-geun and had agreed to strengthen dialogue on semiconductor supply chain cooperation. However, a statement from Ahn’s office said the talks were about “stabilizing the supply and demand of key raw materials and components” and made no reference to semiconductors.

Photo: U.S. Secretary of Defense/Flickr

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