Micron Stock Drops. It’s Waving Goodbye to Some China Business, Says Report.

Micron Technology competes with Samsung Electronics and SK Hynix in memory chips. (Photograph by Matt Kieffer)

Key Points

• Micron Technology is reportedly ceasing server chip supply to Chinese data centers following a Beijing ban, but will continue sales to automotive and smartphone clients.
• Micron’s revenue from mainland China and Hong Kong decreased to about 10% in the last 12 months, down from 25% in 2022.
• The 2023 ban by China’s Cyberspace Administration, citing security risks, led to Micron’s reduced presence in the Chinese market.

Micron Technology stock dropped Friday. The memory chip company looks to be resigning itself to losing business in China.

Micron is set to stop supplying server chips to Chinese data centers after being targeted by a ban from Beijing on the use of its products in critical infrastructure, although it will continue to sell chips to automotive and smartphone customers in the country, Reuters reported Friday, citing people briefed on the decision.

Micron told Barron’s in a statement that its data center business in China has been impacted by the ban, adding that the company abides by applicable laws everywhere it operates.

“Micron’s sales and business infrastructure, including in China, is consistent with the scale of the business that Micron conducts in each region,” the company said. “We have a strong operating and customer presence in China, and China remains an important market for Micron and the semiconductor industry in general.”

Micron shares were down 2.8% Friday but have more than doubled this year so far through to Thursday’s close amid a boom in demand for its products to be used in artificial-intelligence infrastructure.

The company’s Chinese problems date back to 2023, when China’s Cyberspace Administration told companies involved in the country’s critical information systems to stop buying chips from U.S.-based Micron, saying they pose a “major security risk,” without elaborating. The move was widely seen as retaliation against U.S. attempts to restrict exports of advanced chips to China.

Since then, Micron’s business in China has become a smaller part of its operations. In the past 12 months, Micron generated around 10% of its revenue from mainland China and Hong Kong, according to FactSet data, down from 25% in 2022.

Micron’s absence from the Chinese market has been a boon for South Korean rivals Samsung Electronics and SK Hynix. Last month, the Trump administration revoked permissions that had previously allowed Samsung and SK Hynix to ship machinery to Chinese plants without applying for a new license each time.

Write to Adam Clark at adam.clark@barrons.com