A restriction by China on the distribution of Micron memory chips to important domestic corporations represented the most recent turning point in the Sino-American business spat, and a US-based micron technology corporation predicted a blow to earnings in the low-single to high-single-digit percent.
late on Sunday, China’s cyberspace watchdog announced that Micron, the largest US memory chip manufacturer, was unsuccessful in its network safety examination and would be prohibited from selling to controllers of critical assets.
It did not elaborate on the threats it had identified or the products of the business that would be impacted.
Experts noted that the majority of Micron’s major Chinese clients are firms in the customer electronics industry, and thus they foresaw little immediate effect on the company. However, they cautioned that political hazards may cause some businesses to remove Micron products from their supply networks.
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At a press conference, Mark Murphy, Chief Financial Officer of Micron, said it was unknown what worries Beijing had and those direct and indirect sales to businesses with headquarters in China were responsible for around a quarter of the chipmaker’s earnings.
“We are currently estimating a range of impact in the low single-digit percentage of our company’s total revenue at the low end, and high single-digit percentage of total company revenue at the high end,” Murphy said.
Source: malaymail.com
The comments allowed Micron’s stocks to recover some of their damages, the stock’s Nasdaq closing value was down 2.8 percent at US$66.23 (RM301.20).
Washington disagreed with Beijing’s action, however, it boosted the stock prices of Micron’s competitors in China along with South Korea, who are thought to profit as mainland enterprises look for memory chips from additional suppliers.
“We firmly oppose restrictions that have no basis in fact,” a spokesperson from the US Commerce Department said on Sunday.
“This action, along with recent raids and targeting of other American firms, is inconsistent with (China’s) assertions that it is opening its markets and committed to a transparent regulatory framework.”
Source: malaymail.com
Amid Chinese officials’ inspections and excursions to US management consultancy firm Bain and business surveillance group Mintz Group, hostilities between the US and China have risen recently.
Considering a succession of export restrictions by Washington on specific American products including chipmaking equipment to prevent them from being utilized to boost China’s defense potential, Beijing has now aimed at Micron as the primary US chip manufacturer.
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During an argument over semiconductor technology and deteriorating ties between Washington and Beijing, China started the assessment in late March.
The move also comes shortly after the Group of Seven nations agreed to “de-risk, not decouple” economic engagement with China and as US President Joe Biden called for an “open hotline” between Washington and Beijing.
The U.S. Business Department declared that it would communicate with Beijing officials officially to get more information about their conduct.
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