Micron Stock Sinks on China Sales Ban. Why Intel and AMD Look Safe for Now.

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Micron Technology

shares fell on Monday following news it faces a ban on selling chips to some Chinese companies. It’s could be seen as one of the biggest retaliations so far by China against U.S. efforts to restrict exports of advanced semiconductor technology to the country. 

China’s Cyberspace Administration told companies involved in the country’s critical information systems to stop buying chips from U.S.-based

Micron

(ticker: MU), saying they pose a “major security risk,” without elaborating. The ban is needed to protect national security, the agency said on an English-language version of its website. 

The move could be a serious hit to business for the largest American chip maker, which generated 25% of its $30.8 billion in revenue from mainland China and Hong Kong in 2022. 

Micron shares were down 5.7% in premarket trading on Monday. The stock is up 36% this year so far.

Back in March, Chinese authorities said they were reviewing Micron, which knocked the shares down by close to 10% at the time. However, Micron’s shares have subsequently recovered on expectations that its South Korean rivals

Samsung Electronics

(005930.Korea) and

SK Hynix

(000660.Korea) will cut production of their memory chips, easing a supply glut in the industry. 

Micron is a relatively easy target for retaliation in exchange for U.S. restrictions on advanced semiconductor exports to China due to the availability of other memory-chip suppliers. However, replacements for chips of the type provided by U.S. companies Intel (INTC), Advanced Micro Devices (AMD) and Nvidia (NVDA) are likely to be harder to find. 

Chinese chip manufacturer

Ingenic Semiconductor

(300223.China) closed up 2.8% in Shenzhen on Monday after the news of the Micron decision, while

Semiconductor Manufacturing International
Corp
(0981.H.K.), or SMIC, was up 1.2% in Hong Kong. 

Micron said it was evaluating the decision and assessing its next steps, and looked forward to engaging in talks with Chinese authorities, reported The Wall Street Journal. Micron didn’t immediately respond to a request for comment from Barron’s early on Monday.

Write to Adam Clark at [email protected]