US mulls retaliation for China blacklisting Micron without evidence of security threat

Sound like anyone you know?

The chip wars between Washington and Beijing show no sign of cooling off after a senior US politician insisted his country should retaliate for the blacklisting of Micron.

China this week banned products from the US memory chipmaker, supposedly on the grounds of national security, with the nation's Cyberspace Administration ordering that "operators of critical information infrastructure" in China should stop purchasing the products.

Yet the Beijing authorities have declined to detail any reason for Micron's chips failing the security review, and the suspicion has grown that this is simply retaliation for the banning of Chinese products such as Huawei network kit in western markets and US prohibitions on the export to China of key technologies involved in semiconductor manufacturing.

Now the chair of the US House of Representatives' committee on China has voiced his opinion that Chinese memory chip maker Changxin Memory Technologies (CXMT) should be added to a trade blacklist in return, potentially escalating the tensions between the two countries.

"On May 21, the Cyberspace Administration of China determined, without providing evidence, that products made by US firm Micron Technology pose a national security risk to the People's Republic of China (PRC)," Representative Mike Gallagher said in a statement.

The United States must make it clear to China that it will not tolerate economic coercion against its companies or its allies, Gallagher said, and insisted that the US Commerce Department should "immediately add ChangXin Memory Technologies to the entity list and ensure no US technology, regardless of specifications, goes to CXMT, YMTC, or other PRC firms operating in this industry."

Gallagher also said the Commerce Department should ensure no US export licenses granted to foreign semiconductor memory firms operating in China are used to "backfill" lost Micron sales, and that South Korea should likewise act to prevent backfilling.

However, Korea is getting nervous of being caught up in the crossfire between the US and Beijing, especially as it is home to two of the big three memory chip makers – Samsung and SK hynix – that would likely benefit from Chinese buyers seeking an alternative to Micron.

According to Yonhap News Agency, Korea has already asked Washington to review rules it has put in place to limit CHIPS Act subsidies to companies that may already have semiconductor investments in countries such as China.

Under the new rules put in place in March, recipients of US funding under the CHIPS Act are banned from building or expanding by more than 5 percent any existing technology facilities in China, Russia, Iran or North Korea for a period of 10 years.

"The Republic of Korea believes that the 'guardrail provisions' should not be implemented in a manner that imposes an unreasonable burden on companies investing in the United States," Yonhap quotes the Korean government as saying.

Seoul said it will be submitting more detailed comments to the US government on how these important points may be addressed.

Steady on, chaps

Nvidia chief Jensen Huang told the Financial Times today that the ongoing chip wars could do serious damage to America's own technology industries.

In an interview, Huang said US export controls designed to curb Chinese semiconductor advances had left Nvidia with "our hands tied behind our back" and unable to sell its most advanced products in what is one of the company's biggest markets.

He warned that depriving China of high-tech US components would simply spur the country to develop its own replacements, and said Chinese companies are already starting to build their own chips to rival Nvidia's GPUs used for graphics and accelerating AI processing.

Meanwhile, the South China Morning Post reports that Beijing may be trying to limit the fallout from its decision to target Micron with a ban.

China's foreign ministry, the commerce ministry, and news outlets under Beijing's control have all taken a similar angle on the decision, describing the Micron ban as an individual case and not the start of a broader campaign against the legitimate activities of other US firms, the SCMP said. ®