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Chinese chip stocks rally after Beijing says Micron is a ‘security risk’


Micron Technology Double-Data-Rate Synchronous Random-Access Memory (SDRAM) chip

Tomohiro Ohsumi | Bloomberg | Getty Images

Chinese chip stocks rallied on Monday morning after Beijing announced it would curb some purchases of products from the US memory chipmaker. Microns.

China’s Cyberspace Administration has banned operators of China’s “critical information infrastructure” from buying products from the US chip giant following a security review conducted by Cyberspace Administration of China.

Chinese authorities said Micron’s products failed a network security review, citing “serious potential network security issues.” The company posed a “massive security risk” to China’s critical information infrastructure supply chain and affected [its] national security,” said a statement.

Shares of Chinese chipmakers mostly rose on Monday after the move: Hong Kong-listed Hua Hong Semiconductor rose to 3.14% on Monday, while SMIC increased by 2.64%.

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Other memory chip producers in mainland China such as GigaDevice Semiconductor and Ingenic semiconductor jumped 3.74% and 8.08% respectively.

In response to Beijing’s announcement, US Commerce Secretary Gina Raimondo told the Wall Street Journal, “We strongly oppose restrictions that have no basis in fact.” The commerce department will engage with the Chinese government to “detail” its position and seek further clarification, he added.

Raimondo said the US would engage its key allies to respond to Beijing’s actions, and that such moves would cause “distortions in the memory chip market.”

This comes as the US is reportedly urging South Korean chipmakers not to fill China’s shortages if Beijing’s ban goes into effect, the Reported by the Financial Times.

Shares of South Korean chipmakers SK Hynix and Samsung Electronics, both rivals of Micron, rose on Monday morning.

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