12.4 C
Sofia
Monday, November 6, 2023

Beijing signals it may let Micron out of the penalty box in the Middle Kingdom

Micron’s fortunes in China appear to be on the mend after the Middle Kingdom’s commerce minister invited the US chipmaker to expand its investments in the region.

Speaking with Micron CEO Sanjay Mehrotra this week, Minister of Commerce Wang Wentao said China was willing to work with US and other foreign companies to promote investment in the country.

“We welcome Micron Technology to continue to take root in the Chinese market and achieve better development while complying with Chinese laws and regulations,” Wentao said in a machine-translated statement ↗ Friday.

The comments come in stark contrast to sanctions ↗ leveled against Micron in May by China’s Cyberspace Administration (CAC), which labelled the US chipmaker as a security risk.

The restriction barred the purchase of Micron products for use in critical information infrastructure deployed in China. Following the decision, Micron executives predicted that the sanctions would cost ↗ the company $4 billion annual revenues.

This came as Micron was already struggling amid an ongoing inventory correction which has depressed the broader memory market for months. In fiscal year 2023, the company reported a net loss of $5.8 billion on revenues of $15.54 billion.

Despite this, Micron execs have remained optimistic the situation will eventually blow over and shortly after the trade restrictions went into effect, Micron announced ↗ plans to spend $600 million to upgrade its chip packaging facility in Xi’an.

The CAC’s investigation and decision to ban the use of Micron products by some Chinese companies was seen by many as retaliation for US sanctions on chipmaking equipment and AI accelerators leveled by the Biden administration against the Middle Kingdom.

Late last year, the Biden Administration added Yangtze Memory Technologies Co. (YMTC), China’s largest memory vendor to the US entities list ↗ and enacted rules on the export of chipmaking equipment, including machines used in memory chip production, to China without license.

As we reported earlier this week, US sanctions have caused YMTC no shortage of trouble. Having blown through $7 billion in capital raised earlier this year to keep the company afloat, the chipmaker is now looking for fresh funds.

Mehrotra’s meeting with Chinese officials this week comes just weeks before US President Joe Biden is scheduled ↗ to meet with China’s Xi Jinping during the Asia-Pacific Economic Cooperation Summit in San Francisco.

While Micron intends to continue investing in its Chinese facilities, the company’s bid ↗ for US CHIPS funds could prove a limiting factor for future developments in the Middle Kingdom.

Recipients of US CHIPS funds are barred from investing in most semiconductor manufacturing projects in countries of concern — namely China and Russia — and from engaging in joint research efforts or technology licensing with those nations for a period of 10 years.

There is some leeway ↗ for businesses with existing facilities in China, which allow for up to a 5 percent expansion in capacity for advanced chip facilities and a 10 percent expansion for legacy plants over the next decade.

The Register asked Micron for comment on how they intend to juggle US and Chinese investments; we’ll let you know if we hear back. ®

BFIA Admin
BFIA Admin
The big boss.

Related Articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest Articles