China's cyberspace regulator said Micron, the biggest U.S. memory chipmaker, had failed its network security review and that it would block operators of key infrastructure from buying from the company. It did not provide details on what risks it had found or what products from the company would be affected, but it is considered that the move is more political rather than technological.
Analysts said they saw limited direct impact on Micron as most of its key customers in China are consumer electronics players, but warned the move could prompt some companies to rid their supply chains of Micron products due to political risks.
Micron Chief Financial Officer Mark Murphy said at a conference it was unclear what concerns Beijing had and direct and indirect sales to China-headquartered companies accounted for about a quarter of the chipmaker's revenue.
"We are currently estimating a range of impact in the 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," Murphy said.
The remarks helped Micron's shares pare losses, with the stock closing down 2.8 per cent at $66.23 on the Nasdaq on yesterday.
Beijing's decision was opposed by Washington but helped stocks of Micron's rivals in China and South Korea, which are seen benefiting as mainland firms seek memory products from other sources.
"We firmly oppose restrictions that have no basis in fact," a spokesperson from the U.S. Commerce Department said on Sunday.
"This action, along with recent raids and targeting of other American firms, is inconsistent with (China's) assertions that it is opening its markets and committed to a transparent regulatory framework."
Micron is the first U.S. chipmaker to be targeted by Beijing following a series of export controls by Washington on certain American components and chipmaking tools to block them being used to advance China's military capabilities.