China Bans Micron from its Key Information Infrastructure

­Turnabout, I suppose, is fair play. Amidst a U.S. push to purge all Chinese products from their networks, China has responded in kind, barring domestic firms that provide “key information infrastructure” from patronizing the 7th-largest semiconductor manufacturer in the world, U.S.-based Micron Technology.

We just reported how the Federal Communications Commission’s "Rip and Replace" program for Huawei products was chronically behind schedule. While the U.S. government has barred Huawei (and ZTE) from government networks – along with charging the Shenzhen juggernaut with 10 indictments for IP theft, wire fraud, and obstruction of justice – removing it from private networks has proved trickier.

That’s where the “Rip and Replace” program came in, whereby companies that booted Huawei and ZTE from their networks would be reimbursed, and the U.S. set aside $2 billion towards that end.

But after costs ballooned out of control, the program has stalled. In any case, companies with direct ties to Beijing (arguably every Chinese company) and posing a national security risk are in the process of being jettisoned from U.S. networks.

That largely influenced China to review the operations of U.S.-based Micron Technology, for whom the People’s Republic is their third-largest market. At the time, Micron claimed it was still business as usual, but that will almost certainly now change.

China now claims that Micron’s products “have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.” Translation – you hurt our bottom line, and we’ll hurt yours.

A statement from the Chinese foreign ministry was less-than-subtle, noting that “The United States used bullying tactics to brutally suppress the Japanese semiconductor industry, and now it is repeating its old tricks against China. Do unto others, do not impose on others.”

For their part, Micron predicted a range of impact from “low single-digit percentage of our company's total revenue at the low end, and high single-digit percentage of total company revenue at the high end.”

As expected, shares of Micron’s rivals in China and South Korea went up with the news, while Micron stock went slightly down.

And of course, the U.S. state department strongly condemned China’s actions, claiming their accusations against Micron have no basis in fact.

One thing’s for certain – unlike leading Chinese firms, few would accuse Micron of having close ties with the U.S. government.