China Bans Micron, Calls It a National Security Risk
Beijing has banned Micron Technology Inc. (MU:US) from selling its memory chips to some of the most important domestic industries in the country. The move has sent Micron stock crashing and propped up shares of other companies that might benefit from the move.
Micron is the biggest manufacturer of memory chips in the U.S. The ban means it will now lose access to some of the most important infrastructure projects in China, which is the second-largest economy in the world.
China and the U.S. have been involved in a technology feud for some time now. From competing against each other in the 5G race to trade bans, there doesn’t seem to be any end to the battle.
This is what the CAC, the Cyberspace Administration of China, had to say on the matter:
“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.”
They did not mention what the exact risks were. Micron's spokesperson, however, was confident the company can continue its engagement with China and solve the problems.
China is a major market for Micron and last year, the company generated nearly $3.3 billion in sales from the country. This is over 10% of their total revenue and losing a major chunk of it would be a big blow for the chip maker.
There hasn’t been much trading activity in the stock from U.S. representatives this quarter. However, one particular politician, Ro Khanna, stands out because of the sale of $75,000 - $150,000 worth of Micron shares reported two weeks ago.
Micron shares were down over 5% on above-average volume in pre-market, trading as low as $64 earlier in the day. Amid government negotiations on the debt ceiling, the stock is likely to remain under pressure along with the rest of the market.
