What’s going on here?

China took a shot at Micron over the weekend, the latest skirmish in the US-China chip war.

What does this mean?

China’s had a chip on its shoulder ever since the US threw a wrench in its ability to source some of the world's most cutting-edge processors. And the fact that a bunch of other nations took a leaf out of America’s book – bringing in tough export controls of their own – has only fanned the flames of the Middle Kingdom’s ire. So it’s not exactly a shock the country’s seeking sweet revenge. After a seven-week investigation, the Cyberspace Administration of China announced that products made by Micron – the biggest memory-chip manufacturer in the US – pose serious security risks. That’s seen China take its first real step against an American chipmaker, banning operators of critical infrastructure from buying Micron’s products.

Why should I care?

Zooming in: The chip has sailed.

Micron’s fortunes seem to hang on China’s definition of “critical information infrastructure” – but if the country’s buyers play it safe and ditch Micron en masse, this move could seriously hurt. After all, some estimates suggest that China and Hong Kong accounted for up to a quarter of Micron’s sales last year, so it’s no wonder its stock took a nosedive when the news broke. Still, it’s an ill wind that blows nobody any good, and this development probably has the firm’s rivals – like Samsung, SK Hynix, and the Chinese firm SMIC – rubbing their hands in glee.

Source: The Wall Street Journal

The bigger picture: Dreaming of détente.

Newsflash, US chipmakers – you’re no longer guaranteed a warm welcome in the world’s biggest chip market. That read-my-lips statement from China will have fellow American titans like Broadcom and Intel hoping that Biden’s right: the president’s now predicting a thaw in the two countries’ relations before long, after China’s alleged spy balloon saw them grow very frosty indeed in recent times.