Tech war: Micron head meets with Beijing’s commerce ministry after China sales ban, local report says

The reported visit follows a recent pledge by Micron to continue to invest in China despite Beijing’s ban on its products
The report follows Intel CEO Patrick Gelsinger’s recent trip to China, as more US chip makers signal their commitment to China market

Semiconductors

Dylan Butts

Published: 10:30pm, 20 Jul 2023

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The head of American semiconductor giant Micron Technology has visited China and met with the Ministry of Commerce, according to a local media report, two months after the Chinese cyberspace regulator banned sales of its products to certain mainland clients.

State-controlled Chinese newspaper National Business Daily reported that Micron President and CEO Sanjay Mehrotra met the Beijing official on Wednesday, without giving further information about the discussion. Micron did not respond to a request for comment about the report.

The report did not mention whether Mehrotra had met with other Chinese government agencies, including the Cyberspace Administration of China, which imposed the Micron sales ban in May.

If confirmed, the visit would be another indication that American chip companies are reluctant to give up on the Chinese market, despite rising US-China geopolitical tensions.

Intel’s CEO Patrick Gelsinger concluded a low-key trip to China last week as his company pushes its latest processor for artificial intelligence (AI) deep-learning applications, the Gaudi2, a device that is not currently covered by US export restrictions.

China chip industry group urges US not to impose further restrictions

According to memory chip maker Micron, a quarter of its revenue comes from Hong Kong and companies headquartered in mainland China. After Beijing’s sudden ban, Micron said it would maintain communications with the Chinese authorities. The following month, it announced plans to invest 4.3 billion yuan (US$600 million) to upgrade its chip packaging plant in Xian, the capital of central Shaanxi province.

Chinese authorities said in late May that the US memory chip giant had failed to pass a cybersecurity review, and prohibited the sale of its products to China’s critical information infrastructure operators (CIIOs), which include a wide range of entities from telecoms operators to banks and water utilities.

While Micron’s spending in Xian is modest compared to plans to invest US$3.6 billion in Japan, and even the US$825 million it is spending on a new test facility in India over the next few years, Mehrotra said the move showed its commitment to its China operations and the local team.

Other US chip makers have recently reaffirmed their desire to continue doing business in China in the face of reports that the Biden Administration is mulling an expansion of existing chip restrictions on national security grounds.

Earlier this week, the main US semiconductor trade association, which includes Micron and Intel as members, cautioned Washington against further “overly broad” and “ambiguous” restrictions on exports to China, warning this could undermine existing legislation such as the Chips and Science Act.

Micron has said that it will work to mitigate the impact of China’s ban, with only a low double-digit percentage of revenue estimated to be at risk. Some of China’s top server makers, including Inspur Group and Lenovo Group, have already moved to suspend shipments containing Micron chips.

In the first quarter of this year, Micron’s revenue dropped 57 per cent amid the tough conditions in the global chip market, although the performance nevertheless beat expectations.