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Beijing Banning Micron Means China Has Mastered Chip-Making

© AP Photo / John MinchilloSemi-conductor chips are assembled and organized on a workbench before a ribbon-cutting ceremony to mark the opening of a Nanotronics manufacturing center at the Brooklyn Navy Yard, Wednesday, April 28, 2021, in the Brooklyn borough of New York.
Semi-conductor chips are assembled and organized on a workbench before a ribbon-cutting ceremony to mark the opening of a Nanotronics manufacturing center at the Brooklyn Navy Yard, Wednesday, April 28, 2021, in the Brooklyn borough of New York. - Sputnik International, 1920, 22.05.2023
China has slapped a ban on US chipmaker Micron, prohibiting it from selling to Chinese companies involved in key infrastructure projects. Beijing has mirrored Washington's sanctions on the People's Republic's hi-tech technology, Asia-Pacific consultant Thomas W. Pauken told Sputnik, adding that there's more to the development than meets the eye.
The Cyberspace Administration of China (CAC) announced on May 21, that a cybersecurity review indicated Micron Technology's products "have relatively serious cybersecurity risks, which pose significant security risks to the country’s critical information infrastructure supply chain and would affect national security." Thus, the CAC banned the US chipmaker from participating in the People's Republic's domestic critical infrastructural projects. In response, the US Commerce Department expressed its opposition to the restrictions, insisting that they "have no basis in fact." Micron's shares plummeted roughly 6% on Monday, given that the American company used to derive over 10% of its revenue from the People's Republic.
"It's rather interesting that the Washington side may be shocked or surprised by this news," said Thomas W. Pauken II, the author of US vs China: From Trade War to Reciprocal Deal, consultant on Asia-Pacific affairs, and geopolitical commentator. "However, they have taken similar measures themselves to stop Chinese semiconductors and Chinese chips manufacturers or companies that are connected with the chips manufacturing and semiconductor manufacturing to be more involved with the supply chains in the United States as well. So this is not a case where there's a shock or a surprise announcement. It's actually basically China doing the same thing that the US has been doing to China."
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Since October 2022, Washington has imposed sweeping export curbs on advanced chips and chip-making equipment to China, trying to cut off the nation's access to critical technology. Prior to that, under the Trump administration, the US and its Western allies kicked off nothing short of a crusade against the People's Republic's telecom giants, including its flagship Huawei, citing "security" concerns.
"This is a very simple response for Beijing to make and say, 'Well, has the US not acted similarly to what we've been doing?'" noted Pauken. "So it would be hypocritical on the US side to criticize Beijing for taking actions that are similar to Washington's actions. This is hypocrisy at its finest, in regards to Washington and how they're complaining and criticizing China when they're doing the exact same thing that they're criticizing China for. It's laughable. It's just absurd for them to make such an argument when they're doing the same thing."
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The Asia-Pacific consultant suggested that Micron had not been caught off guard: Pauken revealed that when he visited Taiwan last month, he learned from his source that the Micron senior executive in the Kaohsiung office had started laying off employees in April.
As per Pauken, plausibly, the Taiwanese Micron branch had anticipated these instructions, so it could have been the case that they were alerted by Beijing that there was an investigation and they likely realized that the chances of continuing to sell their chip technologies to the mainland were slim.
They had already started to do layoffs even before this announcement happened, the commentator noted. Nonetheless, even if they were prepared for the CAC announcement, it had a devastating impact: "From what I heard, the layoffs in the Taiwan offices were very massive," Pauken emphasized. "Definitely it's a major problem for Micron."
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However, there is more to the development than meets the eye, continued Pauken: according to him, it clearly indicates that Beijing has made considerable advancements in chip-making despite the US trying to contain the country's technological rise.
"You also have to think about this from a strategic level," the author said. "There's no way China would have blocked any chips from Micron if it would cause extreme damage to the Chinese economy. Obviously, they have probably set up supply chains in place and have chips made in China that are maybe not equal in quality to Micron, but close enough so that they could handle the impact of no more Micron chips coming to China."
"So what I'm getting at is that there's no way Beijing took this announcement all of a sudden. They have prepared for it well in advance in anticipation that, of course, the US and Micron would complain. But they, of course, also took the right steps to protect their economy from being severely damaged by this announcement," Pauken concluded.
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