China has banned the US microchip company Micron from the country’s infrastructure projects, calling it a national security risk as it retaliates against the Biden administration’s semiconductor restrictions.
The announcement from China’s cyberspace administration comes amid a growing tech war between the two superpowers and as fears mount that a Chinese invasion of Taiwan could cripple the global electronics industry.
China on Sunday said Micron, which is the biggest US maker of memory chips, posed “serious network security risks” as it banned the technology.
The US said the restrictions “have no basis in fact.”
Shares in Micron fell by 6pc on Monday morning.
The US has made a series of moves to restrict China’s access to the most advanced microchip technology under both the Trump and Biden administrations. It has also banned the use of Chinese technology manufactured by ZTE and Huawei, citing national security risks, and put pressure on Western allies to enact similar bans.
The action against Micron is the first time China has directly retaliated against a US company. Beijing is seen as dependent on US technology, which has until now restricted its ability to respond.
Analysts said China was able to withstand a crackdown on Micron because the two other major memory manufacturers, Samsung and Hynix, are both based in South Korea.
Seoul is willing to allow its domestic manufacturers to ramp up exports to China in the wake of the Micron ban, the Financial Times reported, despite pressure from Washington. The White House has encouraged companies in the region not to ship to China.
Ben Barringer, a research analyst at investment firm Quilter Cheviot, said: “The companies may now need to navigate what could be politically treacherous waters.”
Washington has already restricted the export of US technology needed to manufacture advanced microchips to China.
Microchips have become an increasingly political issue in recent years as a ready supply of the most advanced technology is seen as crucial for economic advancement and military dominance.
Western officials are increasingly concerned about the threat of China invading Taiwan, which is the microchip manufacturing centre of the world.
Taiwan, which China’s president Xi Jinping has vowed to reunite with the mainland, is a hub for advanced chip production. It is feared that China becoming self-sufficient in semiconductors could make it easier for China to invade the island.
The US and Europe are investing tens of billions in setting up advanced domestic semiconductor manufacturing, in an attempt to shore up supplies.
The Cyberspace Administration of China said: “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.”
Micron said it was evaluating its next steps. A spokesman said: “We look forward to continuing to engage in discussions with Chinese authorities.”