China Scales Down Micron Chip Purchases Ahead of Total Rejection

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China recently announced it will cease using Micron products in key industries, an outcome of heightened tension between China and the United States. China has been campaigning to reduce dependency on foreign technologies, urging state-affiliated firms to switch to local software and encouraging domestic chip production. The government had already been tapering off purchases of Micron chips for years, favoring domestic or South Korean alternatives.

A review of over a hundred state tenders conducted by Reuters revealed that although Chinese governmental bodies regularly posted requests for Micron chip purchases, the number of such requests sharply declined since 2020. Instead, the bulk of chip purchases have been directed towards Chinese manufacturers, including Huawei, server producer Inspur, and video surveillance giants Uniview and Hikvision.

Analysts believe the largest memory chip manufacturer in the U.S. became an easy target given China’s own success in memory chip production. “Most of Micron’s chips can be replaced by Chinese counterparts, and those that can’t can be bought from other suppliers. Therefore, the ban on Micron products will not harm China,” stated Alfredo Montufar-Helu, head of the Beijing-based The Conference Board China Center.

In the past three years, only four tenders mentioned Micron products in China, but until 2020, Micron products were in high demand. Once, China was the largest market for Micron, accounting for half of its $20 billion revenue in the 2017 fiscal year. However, last year this share decreased to 16%. “Micron has long been at the eye of the storm, and its operations in China have been facing growing challenges in recent years,” noted Montufar-Helu.

In 2018, Micron was entangled in a patent dispute with state-supported Chinese chip manufacturer Fujian Jinhua, which initially led to a temporary ban on the sale of Micron’s primary products in China. Later, it resulted in the halt of Micron’s DRAM production in Shanghai amid escalating trade tension with Washington. Micron forecasts that the revenue decrease resulting from China’s actions will not exceed 9%.

Chips manufactured by South Korean companies SK Hynix and Samsung Electronics are still included in large Chinese government contracts, but often in addition to domestic products. Meanwhile, U.S. firms remain significant players, with Intel processors, Nvidia graphics processors, and Dell servers acquired by hundreds of governmental bodies post-2020.

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Vasyl Kolomiiets
Vasyl Kolomiiets
I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.

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