A statement released by the China Cyberspace Office on the last day of March shook the chip industry in the United States and geopolitical analysts in Washington. The statement announced a security review of the products of Micron, a major US storage chip manufacturer.
The South China Morning Post in Hong Kong emphasized “the first time”: this is the first time that the Chinese government has taken action against an American semiconductor company.
“Announcement on Launching Cyber Security Reviews for Meguiar’s Products Sold in China”, a statement by the China Cyberspace Office clearly states that the purpose of the cyber security review conducted for Meguiar is to “safeguard the supply chain security of critical information infrastructure”, “prevent potential product issues from causing cyber security risks”, and “maintain national security.”.
About 11% of Meguiar’s sales come from Chinese Mainland. Upon the announcement, Meguiar’s share price in New York fell 4.4%, the largest one-day decline in more than three months.
The American public opinion community first expressed its nervousness. Bloomberg said this shows that Beijing has “opened a new front in the escalating chip war between the United States and China.”.
Network security review is a daily work authority owned by the China Cyberspace Office. However, it cannot withstand the fact that the American media were initially guilty, and some directly speculated on the title: “Reviewing Micron Technology or retaliating against US sanctions.”.
It is not difficult to understand that the US media are so guilty. What has the US government done to Chinese high-tech enterprises over the years? It’s nothing more than naked commercial protection and political repression! So this time, without any need for us to say anything, the Americans themselves launched a full association and explanation. For example, Bloomberg listed the following paragraphs in its news review of Meiguang in China as the “background” of this incident:
“The United States has blacklisted many Chinese technology companies in an attempt to cut off the flow of complex processor chips into China and prohibit its citizens from providing certain assistance to the Chinese chip industry.”
“Washington has also wooed allies. Japan said earlier on Friday that it will expand restrictions on the export of cutting-edge chip manufacturing technology. The Netherlands, another major supplier to the chip tripartite agreement, has also followed the lead of the United States and decided to implement similar restrictions…”
“Gerard DiPippo, Senior Researcher for the Economic Program at the Center for Strategic and International Studies in Washington, said: ‘The investigation into Meguiar may be aimed at pressuring the United States and its allies to exercise caution in export controls.’ ‘More likely, Beijing has reason to worry about China’s dependence on Meguiar chips or other American technologies. It is expected that there will be more such actions in the future.’”
“China’s review comes at a time when US lawmakers are considering imposing a ban on TikTok, a social media platform owned by ByteDance Co., Ltd., headquartered in Beijing…”
In addition, there is also an important background: the Micron Company, headquartered in Boise, Idaho, has played an ignominious role in the US technology war against China in recent years.
In a Bloomberg report on April 1, there was a quote about Micron: “The US government believes that Micron Technology is the victim of ‘economic espionage’ by Fujian Jinhua, a Chinese chip manufacturer. The company was blacklisted by Washington four years ago and is suspected of conspiring to steal trade secrets from US companies.”
The South China Morning Post reported on the same day that one of the important reasons Meguiar received the attention of Chinese regulatory authorities was that the company “actively participated in lobbying the US government to sanction Chinese enterprises.”. The most famous case is that when Meguiar framed Taiwan, China’s United Power Company for “stealing” Meguiar’s technology and handed it to Fujian Jinhua, the US government placed the Fujian company on the sanctions list, leading to its production interruption.
Chinese companies that have been suppressed by Meguiar in recent years also include SMIC International and Changjiang Storage. Meguiar is widely recognized as a company that is adept at using political means to suppress rivals. As early as the 1980s, during the period of fierce competition between American and Japanese semiconductors, Meguiar also cleared the way for its own products by filing a complaint with the US Department of Commerce about “dumping” by Japanese companies such as Fujitsu, Hitachi, Toshiba, and Panasonic.
It is not yet known how the Chinese government’s review will proceed, but the impact on Meguiar may not be too small. In the words of Bloomberg News, after Meguiar has weathered the difficult times of the sharp decline in global consumer demand over the past year, the review by the Office of Cyberspace will extinguish the fire of hope that Meguiar has kindled after optimizing epidemic prevention measures in China.
In 2022, Meguiar ranked sixth among global chip companies in terms of turnover, but its performance was not ideal. Meguiar announced plans to lay off 10% of its employees at the end of December last year, and in February this year, it revised to “expect that the layoffs will be close to 15%.”. There are also reports that Meguiar will receive subsidies from the US government’s Chip and Science Act. They will expand their Boise headquarters and build a new factory there, as well as another new factory near Syracuse, New York. However, the above-mentioned factory “is expected to be fully operational by the end of this decade (before 2030).”.
Chinese mainland securities institutions are optimistic that Meguiar’s review this time will “greatly benefit domestic memory chip companies.”.
At the same time, the US media are nervously evaluating who will be the next US chip manufacturer to be subject to Chinese government scrutiny?
“The following are the U.S. chip manufacturers most affected by the escalation of tensions between China and the United States.” In another article, Bloomberg listed the U.S. chip manufacturers most dependent on China’s business. Among them, Qualcomm ranked first with 64% of its sales coming from the Chinese Mainland market.
Paula Pencar, a senior semiconductor analyst at Bloomberg, said that after all, Meguiar’s direct sales in Chinese Mainland only accounted for 11% of its total sales. “If China really wants to crack down on (the U.S. chip industry), it may involve a broader range of fields”.
Source: Privy Council No. 10
Post time: Apr-03-2023