Ups and downs of US chip companies in China before being banned

Over 20 years of operation in China, Micron Technology invested hundreds of millions of dollars to build a chip factory until it was banned.

On May 21, the Cyberspace Administration of China (CAC) said that Micron did not pass the cybersecurity assessment . According to the conclusion, products from the US chip company pose "severe cybersecurity risks, posing a significant security risk to China's critical information infrastructure supply chain and national security".

Before being banned, Micron operated in China for two decades. Founded in 1978 in Idaho, Micron is one of the early American technology companies operating in the country of billions of people. In 2001, the company set up an office in Xiamen. This is also the year China joined the World Trade Organization (WTO).

A Micron chip factory. Photo: Bloomberg

In 2004, Micron founded a company in Shanghai with about 60 employees, then opened branches in Beijing and Shenzhen to provide corporate services, sales and marketing. The company also established an integrated circuit (IC) design center in Shanghai with 50 employees.

Three years later, the company continued to open a manufacturing plant in Xi'an, the capital of Shaanxi province, to assemble and test products including DRAM memory chips, NAND flash memory and CMOS image sensors. With an investment of $250 million and 2,000 employees, it is Micron's first factory in China and second in Asia, and the largest foreign-invested project since China's reform and opened in 1978.

In 2010, Micron spent another $300 million to build a second module assembly and chip testing facility in Xi'an. Four years later, the company poured $250 million with Powertech Technology - a Taiwanese chip assembly, packaging and testing company - to build a manufacturing plant. The factory was completed in 2017. At this point, Micron ranks fourth among China's top semiconductor suppliers, behind SK Hynix, Huawei's HiSilicon Technology and SMIC.

Also from 2017, Micron began to get into a technology dispute with China. That year, they sued Taiwanese chip maker UMC and Fujian Jinhua Integrated Circuit company Fujian on the grounds of stealing trade secrets. The lawsuit was filed in federal court in California.

Founded in 2016, Fujian Jinhua received an investment of three billion yuan ($431 million) from the Chinese government to build the production line with technology support from UMC.

In early 2018, Fujian Jinhua and UMC sued Micron, accusing the US chip company of infringing on patents on DRAM modules. Four months later, the Antitrust Watchdog and China's State Market Administration began investigating Micron. At this time, Samsung and SK Hynix were also investigated for the same reason.

In July 2018, the Fujian Court ruled that Micron must stop selling 26 semiconductor products including DRAM and NAND flash in China and not be allowed to appeal. The US chip company then expressed its displeasure, and asserted that its products did not infringe on patents.

In early 2020, Micron had an important victory over UMC when the Taiwanese company admitted to stealing Micron's trade secrets, and also paid a fine of 60 million USD.

Two years later, Micron suddenly announced the closure of its DRAM design operations center in Shanghai, and offered to move most of its 150 Chinese engineers to facilities in the US and India. At the moment, Micron has about 3,000 employees across China.

At the end of March, the Cyberspace Administration of China (CAC) announced an investigation of Micron citing "protection of supply chain security and critical information infrastructure", as well as "preventing security risks". Cybersecurity from questionable products". On May 21, American companies were banned from selling products in China. Micron said it had received notice from Beijing and was "evaluating next steps in the spirit of looking forward to continuing to engage in discussions with the Chinese authorities".

According to experts, the ban is seen as a counterattack by China in the context that the US is tightening the semiconductor business and lobbying countries such as Japan, the Netherlands, and South Korea to do the same.

"It could be China's way of sending a warning signal to countries like Japan or South Korea that are starting to move to restrict Chinese semiconductors," said analyst Wang Lifu of research firm ICwise. with SCMP in early May, when Micron was under investigation.

Morningstar analyst Abhinav Davuluri doesn't believe products sold by Micron pose a security risk. "The investigative order seems more political, especially since China is building a semiconductor ecosystem of its own," Davuluri told Bloomberg .

Bao Lam (according to SCMP )

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