China asserts that products manufactured by US memory chip colossus Micron Technology pose a threat to national security.

Sunday, the nation’s cyberspace regulator announced that the nation’s largest memory chip manufacturer poses “serious network security risks.”

It means that the firm’s products will be prohibited from critical infrastructure projects in the second-largest economy in the world.

It is China’s first significant move against an American chip manufacturer as tensions between Beijing and Washington increase.

The announcement is the latest escalation in a dispute between the United States and China over vital technology for global economies.

Washington has imposed a series of measures against Beijing’s chip manufacturing industry and invested billions of dollars to bolster America’s semiconductor industry due to the protracted dispute.

Cyberspace Administration of China (CAC) issued the following statement: “The review found that Micron’s products pose serious network security risks, which threaten China’s critical information infrastructure supply chain and China’s national security.”

The CAC did not specify the dangers it claimed to have discovered or which Micron products contained them.

The company had “received notice from the CAC following its review of Micron products sold in China.”

“We are assessing the conclusion and our next actions. They added, “We look forward to continuing our discussions with Chinese authorities.”

In response, the US government stated that it would collaborate with allies to resolve “market distortions caused by China’s actions” regarding memory chips.

A representative for the U.S. Department of Commerce stated, “We vehemently oppose restrictions that have no factual basis.”

“This action, along with recent raids and the targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework.”

The share price of Micron fell 5.3% in pre-market trading in the United States.

Analysts at the investment banking firm Jefferies stated that “the ultimate impact [of the ban] on Micron will be quite limited” because the company does not rely heavily on the Chinese government or telecommunications for the majority of its sales in the country.

The majority of Micron’s semiconductor customers in China are smartphones and personal computers.

However, CJ Muse, an analyst at Evercore ISI, stated that there was a possibility that Micron’s Chinese consumers would switch to its South Korean competitors Samsung and SK Hynix.

“In the meantime, the United States has urged South Korea not to fill any gaps left by China,” he said.

China is an important market for Micron, accounting for approximately 10% of its annual revenue. Micron reported total revenue of $30.7 billion (£24.6 billion) in 2022, of which $3.3 billion originated from mainland China.

Additionally, it has manufacturing facilities in the nation.

The CAC’s announcement followed a G7 leaders’ conference in Japan that condemned China’s “economic coercion.”

On Sunday, US Vice President Joe Biden said the G7 wants to “de-risk and diversify our relationship with China.”

“This requires diversifying our supply chains,” he added.

Sanjay Mehrotra, chief executive officer of Micron, attended the Hiroshima summit alongside other business leaders.

Last week, the business pledged 500 billion yen ($3.6 billion; £2.9 billion) to develop technology in Japan.