BOISE, Idaho — China's Cyber Security Review Office announced Friday that it will implement a review of products that Micron Technology sells in China.
Micron, based in Boise, is the world's fourth-largest semiconductor company and the leading U.S. manufacturer of computer memory. The People's Republic of China accounted for 11% of Micron's annual sales in 2022, according to a report in The Wall Street Journal. The company also has facilities in China as well as more than a dozen other countries around the world.
The Cyberspace Administration of China's announcement states the office is initiating the review "in order to ensure the security of the key information infrastructure supply chain, prevent network security risks caused by hidden product problems, and maintain national security," in accordance with China's national security and network security laws.
In response to KTVB's request for comment, a Micron spokesperson said the company is aware of the Cyberspace Administration of China's announced plans to conduct the cybersecurity review.
"We are in communication with the CAC and are cooperating fully," the statement continued. "Micron is committed to conducting all business with uncompromising integrity, and we stand by the security of our products and our commitments to customers.”
At the end of regular trading on Friday, Micron's stock price had dropped by 4.36% for the day as news of China's cybersecurity review announcement spread.
The announcement comes at a time of growing tensions between the U.S. and China in the geopolitical and business arenas, and at a challenging time for Micron and for the semiconductor industry in general.
"In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), that is intended to advance China’s stated national policy objectives," Micron said in its annual report filed in early October 2022, following the company's 2022 fiscal year. "In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies."
In that report, Micron also noted that in addition to China, other governments also are providing or may provide "significant assistance" to some of Micron's competitors, and may intervene in support of their countries' industries.
Here in the U.S., Micron stands to receive incentives authorized in the CHIPS and Science Act to expand semiconductor manufacturing on American soil. Since the passage of that legislation, Micron has announced plans to expand its Boise headquarters and build a new fabrication facility there and to build another new fab near Syracuse, New York — facilities not expected to be in full operation until near the end of this decade.
In the short term, Micron is looking to cut costs. The company earlier this year announced that its cost-cutting measures will include workforce reductions through voluntary departures and through layoffs.
In its most-recent quarterly report, released Tuesday, March 28, Micron reported a $400 million decline in revenue from the first to the second quarter of the current 2023 fiscal year, and a year-over-year drop of $4.1 billion, and a net loss of more than $2 billion (GAAP net loss of $2.12 per diluted share) — a net loss that was more than general expectations on Wall Street. Micron attributed much of that net loss to $1.43 billion ($1.34 per diluted share) in inventory write-downs.
After the release of the quarterly report, Micron President and CEO Sanjay Mehrotra said the second-quarter 2023 revenue of $3.69 billion was "within our guidance range in a challenging market environment."
"Customer inventories are getting better, and we expect gradual improvements to the industry's supply-demand balance," Mehrotra said. "We remain confident in long-term demand and are investing prudently to preserve our technology and product portfolio competitiveness."
Watch more Local News:
See the latest news from around the Treasure Valley and the Gem State in our YouTube playlist: