The Chinese cyberspace regulator, or CAC, has announced that it plans to inspect the American company Micron memory, whose products are sold in China, in order to ensure security in the supply chain of important information infrastructure elements and protect national security. This move comes amid deteriorating relations between China and the United States, which has raised concerns among international companies doing business in China about the possibility of facing similar actions.
The CAC’s inspection of Micron memory may also indicate a more global change in Chinese policy towards other American suppliers, according to analysts, such as Matthew Brayson from Wedbush Securities. In its annual report, the company noted increasing competition in China due to the government and state companies investing more in the domestic semiconductor industry. Micron also warned that the Chinese government may limit its participation in the local market or make competition with Chinese firms more difficult.
While Beijing is actively attracting foreign investments to stimulate its economy after restrictions related to COVID-19 slowed it down, the authorities continue to exert pressure on transnational corporations. For example, the Beijing office of American law firm Mintz Group was recently searched and five of its employees were arrested. The authorities also suspended the activities of Deloitte Beijing Office for three months and imposed a fine of $31 million for alleged violations during the audit of state company China Huarong Asset Management Co.
China has been demanding that critical information infrastructure operators undergo cybersecurity checks when ordering goods and services that may affect national security in recent years. However, Beijing claims that this requirement does not imply restrictions or discrimination against foreign companies.
The verification of Micron memory products could become a signal for other international companies operating in China about the possible change in Chinese policy towards foreign enterprises. This could lead to a change in business strategies and additional precautions among foreign corporations that interact with the Chinese market.