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Micron ban ramps up US-China trade tensions

A move by Beijing to bar U.S. firm Micron Technology Inc from selling memory chips to key domestic industries has ramped up tensions in an ongoing trade spat with Washington and lifted shares of firms that could benefit from the move.

China’s cyberspace regulator said late on Sunday that 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.

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.

Shares in Micron tumbled 5.5% in premarket trading on Monday, while other U.S. chipmakers with big exposure to China such as Qualcomm, Intel and Broadcom were down nearly 1%.

Beijing’s decision was opposed by Washington but also 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 in a statement 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.”

Tensions between Washington and Beijing have grown in recent months following raids and visits by Chinese authorities to U.S. corporate due diligence firm Mintz Group and management consultancy Bain.

Micron said on Sunday it had received the regulator’s review and looked “forward to continuing to engage in discussions with Chinese authorities”. Reuters

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