China has started an investigation on Micron Technology, the biggest chip manufacturer in the US, over national security concerns. However, some analysts suspect that there could be something more behind Beijing's probe, as it could be an act of retaliation against Washington's efforts to prevent Chinese companies from taking over the semiconductor industry.
Micron's Alleged Role to Place Sanctions on China the Driving Force Behind Cybersecurity Probe
The trade tension between the two superpowers has escalated further with China's move to start a cybersecurity investigation into Micron. As reported by Financial Times, the Cyberspace Administration of China released a statement on Friday that explains the reason for conducting the probe. For one, the Chinese government is performing its function to defend national security and the state of the country's information infrastructure.
Beijing believes that the Nisdaq-listed tech company is "playing a negative role" that impacts China's standing in the technology industry, as reported by South China Morning Post. Wang Lifu, a resident analyst of the semiconductor research firm ICwise, said that Micron has a role in pushing the US government to place sanctions on China.
As per Bloomberg, China's investigation in itself is enough to affect Micron's performance in the global market, especially at this point when the country is trying to recover from a dismal year.
Following the announcement of the probe, the Idaho-based chip maker's shares dropped by 4 percent. The company's stock even fell to $59.90, or a 5.1 percent drop, in New York. The repercussion of the probe announcement in the China has yet to be seen, although it is expected to be crippling as 11 percent of Micron's sales come from the country.
Industry experts suspect that the probe on Micron is China's way of establishing itself as a leader in the semiconductor industry. According to Abhinav Davuluri, Morningstar's equity strategist, "China has been investing aggressively to build out its own semiconductor ecosystem," and the best place to start to do this is the chip-making industry.
"This seems more political in nature than anything, a rebuttal to recent US actions. In terms of specific security risks for the products sold by Micron, I'm skeptical there's anything there," Davuluri added.
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Probe Adds Fuel to Fire as US, China Engage in Tech War
Prior to China's cybersecurity probe, Washington has already made its move to limit Chinese companies' potential in the semiconductor industry, like placing some of them on a blacklist. Fujian Jinhua Integrated Circuit Co., for example, has been blacklisted for 4 months now due to allegations of "economic espionage" and "conspiring to steal trade secrets from Micron."
The US has also ceased the delivery of processors from Chinese tech makers to the country. Washington restricted the export of Chinese chips, a move that was also adopted by Japan and the Netherlands.
The Chinese probe is a big deal for the US as Micron currently stands as the country's largest manufacturer of computer memory parts, with the downfall of known American chip makers like Intel Corp. and Texas Instruments Inc.
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