Micron to Withdraw Server Chip Sales from China
- Micron will stop supplying server chips to Chinese data centres after a 2023 ban, shifting focus to other global markets amid rising AI demand.
Exit Follows Prolonged Impact of Infrastructure Ban
Micron Technology has decided to discontinue its server chip business in China, following a government ban that has hindered recovery efforts since 2023. The restriction, which targeted Micron’s products in critical infrastructure, marked the first such move against a U.S. chipmaker by Chinese authorities. Industry observers viewed the action as a response to Washington’s broader efforts to limit China’s semiconductor advancement. Since the ban, Micron’s market position in China’s data centre segment has steadily eroded.
Despite the exit from Chinese data centres, Micron will continue supplying chips to two Chinese customers with operations outside mainland China, including Lenovo. The company also plans to maintain sales to automotive and mobile device manufacturers within China, which accounted for 12% of its annual revenue last year. In a statement, Micron acknowledged the ban’s impact and emphasized its compliance with local regulations. Lenovo declined to comment on its ongoing relationship with the U.S. firm.
Trade Tensions and Competitive Landscape
The move comes amid escalating U.S.-China tech tensions that began in 2018 with tariffs and sanctions targeting firms like Huawei. Micron, along with Nvidia and Intel, has faced scrutiny from Chinese authorities over alleged security risks, though only Micron has been subject to formal regulatory action. All three companies have denied the accusations, asserting the integrity of their products. While the U.S. has sanctioned hundreds of Chinese entities, China has taken a more selective approach to regulation.
China’s data centre investment surged to 24.7 billion yuan ($3.4 billion) last year, driven by AI adoption and government-backed infrastructure growth. Micron’s absence from this boom has allowed competitors such as Samsung, SK Hynix, YMTC, and CXMT to gain ground. Nevertheless, global demand for AI-related hardware has helped Micron offset losses, contributing to record quarterly revenue. The company now aims to expand in Asia, Europe, and Latin America to compensate for its reduced presence in China.
Workforce and Strategic Adjustments
Micron’s data centre team in China includes over 300 employees, though the impact on staffing remains unclear. Earlier this year, the company laid off several hundred workers in its mobile NAND division, ending future development in that segment. However, it continues to invest in its chip packaging facility in Xian, signaling a selective approach to its China operations. Micron reiterated its commitment to the Chinese market, noting its importance to the broader semiconductor industry.
China’s Domestic Chipmakers Gain Momentum
Chinese memory chip producers YMTC and CXMT have accelerated expansion efforts, supported by state funding and favorable procurement policies. These firms are increasingly seen as strategic assets in China’s push for tech self-sufficiency. According to industry analysts, their growth could reshape the global memory chip landscape in the coming years. Micron’s withdrawal may further open the door for domestic players to capture market share in high-value infrastructure segments.
