Tech war: Beijing’s cybersecurity review into US memory chip maker Micron opens opportunity for Chinese suppliers to fill gap in market

  • A possible ban on Micron products in China is expected to see Yangtze Memory Technologies Co and other mainland suppliers fill any void in the market
  • The local inventory of memory products has not been affected by Beijing’s Micron review owing to an abundant supply from alternative mainland sources

China’s cybersecurity review into Micron Technology, the United States’ largest memory chip maker, has opened an opportunity for mainland suppliers, led by Yangtze Memory Technologies Co (YMTC), to plug any potential gap in the market, according to local analysts and merchants.

With heightened tensions between Washington and Beijing expected to affect the mainland businesses of South Korean memory chip giants Samsung Electronics and SK Hynix, a possible ban on the sale of Micron products in China could enable YMTC and other local suppliers to fill the void left by the US firm in the market, according to Chen Jia, a researcher at Renmin University of China in Beijing.

“In the memory chip sector, China has basically solved the bottleneck problem,” Chen said.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Some merchants at Pacific Digital Plaza, one of the largest computer shopping centres in Shanghai and a major hub for sourcing electronic components, recently expressed a similar view.

Pacific Digital Plaza, located in downtown Shanghai, is one of the city's largest sourcing hubs for electronics components. Photo: Ann Cao

© Provided by South China Morning Post
Pacific Digital Plaza, located in downtown Shanghai, is one of the city’s largest sourcing hubs for electronics components. Photo: Ann Cao

At a small kiosk that sells a wide range of electronic components on the first floor of Pacific Digital Plaza, 30-year-old vendor Liu Bei said “Samsung is still the best choice” when buying a solid-state drive (SSD) – a storage device that typically uses a flash memory chip.

But he also indicated that local SSD products, such as those from YMTC and Shenzhen KingBank Technology Co, have become good alternatives to Samsung. “You can find very few distributors for Micron or other brands in the market,” he said.

Without providing any details, other merchants at the electronics hub indicated that domestic memory chip suppliers like YMTC, which have set lower prices than their foreign rivals, have increased competition in the market.

They added that the local inventory of memory products has not been affected by Beijing’s Micron review because of an abundant supply of devices from alternative mainland sources.

An aerial view of Micron Technology's headquarters and main production complex in Boise, Idaho. Photo: Shutterstock

© Provided by South China Morning Post
An aerial view of Micron Technology’s headquarters and main production complex in Boise, Idaho. Photo: Shutterstock

On March 31, the Cyber Security Review Office, under the Cyberspace Administration of China (CAC), launched an investigation into Micron products sold on the mainland to “safeguard key information infrastructure supply chain security” and “prevent cyberspace security risks due to problematic products”.

Neither the Chinese government nor Micron have provided further information on the investigation. Micron, which had earlier said it was “in communication with the CAC and cooperating fully”, is the first foreign semiconductor company to be put under a cybersecurity review by China.

That review marks a “major concern” for other companies operating in the country, according to a statement this week from Lester Ross, chair of the policy committee at the American Chamber of Commerce in China.

While the Micron investigation threatens to ratchet up Sino-US tensions, the situation has also helped boost the profile of YMTC and other Chinese suppliers in terms of how they can quickly meet the local market’s requirements.

Why China opened an investigation into US semiconductor firm Micron Technology

These mainland suppliers have cut memory product prices to help expand their market share. On the e-commerce platform, Shenzhen Fanxiang Information Technology Co, which uses YMTC’s memory chips, sells it 2-terabyte SSD for 509 yuan (US$73.50), or about half the price of a Samsung SSD with the same capacity that costs 1,049 yuan.

A long list of Chinese SSD brands on – including ZhiTai, Move Speed, Gloway and Maxsun – already claim to use YMTC memory chips as part of their marketing pitch.

YMTC, which was added to the US trade blacklist last December, plans to use locally sourced chip-making equipment to make advanced flash memory products, according to a South China Morning post report on Sunday, citing industry sources.

If that YMTC project, code-named Wudangshan, proves successful, it would represent a breakthrough in China’s efforts to become self-sufficient in semiconductor production, as US-led restrictions have blocked mainland companies’ access to advanced chip-making equipment because of national security concerns.

Beijing’s probe into US chip firm Micron could help Chinese suppliers, South Korean rivals

That development comes amid reports this week that Washington has asked Seoul to press South Korean memory chip makers not to fill any market gap in China if Beijing ends up banning Micron product sales on the mainland.

Such a move to abandon the mainland, however, would run against business rationale for South Korean chip companies if and when a ban on Micron gets implemented, according to Renmin University’s Chen.

Echoing that assessment, the director at research institute Shendu Technology, Zhang Xiaorong, said: “Now that the global consumer electronics market is going down, chip companies are counting on the Chinese market to drive growth.”

Samsung, for example, reported on Thursday a record quarterly loss of 4.58 trillion won (US$3.4 billion) at its chip division, punctuating concerns about a broad tech downturn. South Korea’s largest company saw its revenue from China decline from 16 per cent to 12 per cent between 2017 and 2022, according to its latest annual report.

US urges South Korea not to fill China shortfalls if Beijing bans Micron chips

The global memory market is forecast to reach US$92.3 billion this year, down 35.5 per cent from 2022, because of an “overcapacity of chips and excess inventory”, according to tech research firm Gartner.

For Micron, with sales on the mainland and Hong Kong accounting for 16 per cent of its total revenue in 2022, a ban on its products in the world’s largest semiconductor market would be the firm’s “worst-case scenario” amid “slumping demand in the [global] memory market”, said Arisa Liu, a research fellow and director focused on semiconductors at the Taiwan Institute of Economic Research.

Additional reporting by Che Pan

More Articles from SCMP

Artistic or morbid? Giant art project showing black-and-white portraits outside Hong Kong mall sparks internet debate

World Rugby Sevens Challenger Series: Hong Kong teams prepare for final tilt at elite status

Housing Authority tightens Home Ownership Scheme rules, bans Hong Kong public housing tenants who already own property from buying subsidised flats

12 per cent of Hong Kong secondary school students left city for tertiary studies last year, most choosing mainland China

This article originally appeared on the South China Morning Post (, the leading news media reporting on China and Asia.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.