China’s Cyberspace Administration of China (CAC) on Friday announced plans to audit products sold in the country by US memory chipmaker Micron. reported Business newspaper Wall Street Journal.
According to the regulator, this decision aims to secure the supply chain of critical information infrastructure, prevent hidden risks and protect national security. The audit comes amid rising tensions between the US and China and will no doubt spark fears from international companies operating in China about being next on the list.
“The punitive action against Micron may indicate a broader shift in Chinese policy towards other US suppliers with high influence in China, who may now face similar measures,” said Matthew Bryson, an analyst at Wedbush Securities.
In 2022, China accounted for nearly 11% of Micron’s annual sales, or $3.3 billion. The company said in its annual report about growing competition in China as government agencies and state-owned companies increase investment in the local semiconductor industry. “The Chinese government could limit our participation in the Chinese market or prevent us from effectively competing with Chinese companies,” Micron noted in a 2022 report.
Beijing is scrambling to attract foreign investment to revive the economy, which has slowed due to three years of COVID-19-related restrictions. At the same time, the PRC authorities continue to put pressure on transnational companies.
The Beijing office of New York-based due diligence firm Mintz Group was raided last week and five employees arrested. Earlier this month, authorities shut down Deloitte’s Beijing office for three months and fined it $31 million over alleged oversights in an audit of state-owned China Huarong Asset Management Co.
In recent years, China has required operators of critical information infrastructure to undergo cybersecurity screening when ordering goods and services that could affect national security. However, Beijing said this requirement is not intended to restrict or discriminate against foreign companies.