Key Takeaways:
- The US is concerned that China would use chipmaking technology to develop military uses.
- Micron Technology is one of the world’s largest manufacturers of memory chips.
- South Korea’s position in this situation is complicated.
WISCONSIN (CoinChapter.com) — Suppose Beijing bans American chip maker Micron Technology. In that case, the United States has asked South Korea, one of the world’s top exporters of memory chips, to avoid making up any shortages in China.
The request comes in response to the announcement made by China’s cyberspace regulator. It said that it would examine the cybersecurity of Micron goods marketed there.
Since mainland China and Hong Kong accounted for one-fourth of Micron’s $30.8 billion in revenue last year, the tensions are significant, even if it is uncertain whether punitive action would be taken against it. This circumstance also highlights how chips are at the root of some of the most significant fault lines between Washington and Beijing.
The History
The US is concerned that China would use chipmaking technology to develop military uses, which has resulted in several export prohibitions due to the continuous conflict between the two countries over technology exchange.
The rivalry between the two countries has intensified due to the US government’s blocklisting of several of China’s major chip companies, including Yangtze Memory Technologies Co Ltd, a competitor of Micron.
The blocklisting has prevented US companies from supplying technology to Chinese companies, which has resulted in chip scarcity in China.
The Micron Ban
Micron Technology, based in Idaho, is one of the world’s largest manufacturers of memory chips.
It has been a target of the Chinese government for some time, with regulators accusing the company of infringing on patents and engaging in anti-competitive practices. The cybersecurity review announced in March is the latest move by the Chinese government to put pressure on the company.
The stakes are high for Micron, given that China is one of its largest markets. The company has invested heavily in China, including a $3.2 billion Xi’an factory producing DRAM chips. If China were to ban Micron, it would impact the company’s bottom line and ability to compete globally.
The US Request to South Korea
The US has asked South Korea to encourage Samsung Electronics and SK Hynix, two of the world’s largest memory chipmakers, to hold back from boosting sales to China if Micron is banned. Washington is concerned that if South Korean chipmakers fill the gap left by Micron, it will undermine the effectiveness of the US’s export controls on China.
South Korea’s position is complicated. It is an ally of the US and is caught up in the trade war between the US and China. South Korea’s economy heavily depends on exports, and China is one of its largest markets. Samsung and SK Hynix would not want to jeopardize their position in the market.
The Implications
The US request to South Korea highlights the global impact of the ongoing trade war between the US and China.
The situation is particularly fraught in the technology sector, with companies caught in the middle of the conflict. The US is concerned about China’s growing technological prowess and sees its efforts to develop its chipmaking industry as a threat to national security.
Conversely, China sees the US’s export controls as an attempt to stifle its technological development and gain an unfair advantage in the global marketplace. Unfortunately, the situation is unlikely to be resolved anytime soon, and there will likely be further tension and conflict between the two nations in the coming years.
In the short term, the situation could have serious implications for companies that rely on the Chinese market.
Micron Technology is a prime example of this, with the company’s share price dropping significantly following news of the cybersecurity review. In addition, companies that rely on China, including Apple and Intel, could also be impacted if the situation escalates.
It is unclear how the situation will be resolved, but there will likely be further tension and conflict between the two nations in the coming years.
As a result, companies that rely on the Chinese market will need to tread carefully, as they could be caught up in the crossfire. As for Micron, the company must be vigilant and work closely with the US government to ensure it can continue operating in China.
