China's internet regulatory authority, the Cyberspace Administration (CAC), has prohibited domestic firms from purchasing chips manufactured by Micron, a US-based enterprise.

The directive, reported by Reuters, is justified on the grounds of "significant security risks," particularly related to the nation's data infrastructure that involves governmental banks and telecom service providers. The prohibition, as of now, seems to only influence Chinese-based companies and does not impact other market demographics. The initiation of this action can be traced back to March when the Chinese government asked the CAC to scrutinize Micron chips' market entry in the country. This act is largely interpreted as a direct response to the international sanctions imposed on China since 2020.

Micron has voiced its intent to engage with Chinese officials to resolve the matter. They stated, "We are assessing the implications of this sanction and deliberating our future course of action. We intend to maintain an open dialogue with Chinese authorities." Given that a significant 10% of Micron's revenue is derived from the Chinese market, this sanction could potentially affect their financial performance.

China Responds with Determination - This action is viewed by market observers as China's retaliation strategy against recent allegations, with Micron being a manageable target to articulate their stance. The political atmosphere between the nations is escalating, underscored by rumors of a planned invasion of Taiwan and the subsequent US threat to attack TSMC's factory. The issue was a point of discussion at the recent G7 Summit, though any resultant decisions have not been disclosed publicly as of yet.

China Imposes Constraints on Micron: US Firm Confronts Chip Sales Prohibition