Micron Technology Inc. warned that about half of its sales tied to China-headquartered clients may be affected by a cybersecurity probe being carried out by the Chinese government, representing a “low-double-digit percentage” of its global revenue.
Several of Micron’s customers are being contacted by officials as part of a probe by the Cybersecurity Administration of China, announced earlier this year, the company said in a regulatory filing. Micron’s revenue with businesses based in mainland China and Hong Kong, including direct sales as well as indirect sales through distributors, accounts for about a quarter of Micron’s global revenue and remains the principal exposure, the company said.
“Micron is working to mitigate this impact over time and expects increased quarter-to-quarter revenue variability,” the company said in the filing.
Micron, the largest US memory chipmaker, fell 1.5% in New York Friday morning.
The technology sector has become a key battleground over national security between the two largest economies. US lawmakers have decried Beijing’s moves against Micron as a thinly veiled attack on an American company, at a time Washington itself is imposing sanctions on China. The US has blacklisted Chinese tech firms, cut off the flow of sophisticated processors and banned China’s citizens from providing certain help to the domestic chip industry.
In May, China’s cybersecurity regulator said Micron’s products failed to pass a review and barred the company’s chips from “critical infrastructure.” Beijing warned operators of key infrastructure against buying the company’s goods, saying it found “relatively serious” cybersecurity risks in Micron products sold in the country.
Micron has said previously that it stands by the security of its products and commitments to customers.
The ban on Micron’s chips exacerbated the uncertainty dogging US chipmakers that sell to China, the world’s biggest market for semiconductors. Companies like Qualcomm Inc., Broadcom Inc. and Intel Corp. deliver billions of dollars’ worth of chips to the country, which imports more semiconductors than oil.
Despite the restrictions, the Boise, Idaho-based company on Friday announced it would be plowing another $600 million into an existing packaging facility in central China. The company will acquire equipment and add assembly lines at its existing facility in the central city of Xi’an over coming years, it announced in a post on Chinese social media platform WeChat.
Washington is seeking to strengthen key supply chains outside of China as it works to contain Beijing’s geopolitical ambitions. The US is pushing to build advanced chipmaking domestically and in friendly countries as growing global tensions spur concerns about the world’s reliance on Asian centers, such as Taiwan, which China claims as part of its territory.
Intel announced on Friday a new $4.6 billion chip facility in Poland and Micron is close to an agreement to commit at least $1 billion toward setting up a semiconductor packaging factory in India, people familiar with the matter said.
(Updates with detail on probe and investment in packaging facility.)