Micron Exits China’s Server Chips Market Following Ban
In 2023, Micron Technology announced it would cease supplying server chips to data centers in China. This decision follows a ban imposed by the Chinese government on Micron’s products in critical infrastructure sectors. As a result, the company’s operations in China have been significantly impacted.
Details of the Ban and Market Exit
The ban on Micron’s products is perceived as a retaliatory measure against U.S. restrictions on China’s semiconductor advancements. Despite this setback, Micron plans to continue supplying chips to other sectors, including automotive and mobile phone industries, within China.
Continuing Operations and Financial Impact
- Micron generated $3.4 billion, accounting for 12% of its total revenue, from its mainland China operations in the last business year.
- The company will maintain sales relationships with significant Chinese customers, such as Lenovo, which operates data centers outside of China.
Jacob Bourne, an analyst at Emarketer, noted that Micron is seeking new customers across Asia, Europe, and Latin America. He emphasized that while China remains crucial, the global demand for data centers, particularly fueled by artificial intelligence, presents alternative opportunities for Micron.
U.S.-China Trade Tensions
The U.S.-China trade rivalry has intensified since 2018, initiated by tariffs imposed during Donald Trump’s presidency. This conflict has included sanctions targeting companies like Huawei, which is accused of national security risks—a claim Huawei has denied. Similar accusations have been leveled against Nvidia and Intel without resulting in regulatory actions.
Impacts of the Ban on Micron
The ban has impeded Micron’s access to China’s rapidly growing data center market. This segment has expanded significantly, with investments in data centers reporting a ninefold increase to ¥24.7 billion ($3.4 billion) last year. Competitors such as Samsung Electronics and SK Hynix have benefited from Micron’s absence in this space.
Despite these challenges, Micron reported record quarterly revenue fueled by growth in other global markets. The demand for data centers continues to surge globally, even as Micron faced difficulties in China.
Future Prospects
Micron employs over 300 people in its China-based data center team. The company has been actively downsizing in other areas, including a recent layoff of several hundred employees in its universal flash storage program. However, Micron continues to invest in its chip packaging facility located in Xian.
Micron assures that it values its operations in China and remains a significant player in the global semiconductor landscape. The company will strategically focus on markets outside China while navigating ongoing geopolitical tensions.
