Following China's move on May 21 to prevent its critical IT infrastructure operators from procuring Micron products, citing national security concerns, China-based securities firms belive that it will drive the process of domestic substitution in China's low- to mid-end memory sector.
China is Micron's second-largest market. In 2022, Micron's revenue reached US$30.8 billion, of which China accounted for 11%, or US$3.31 billion. Furthermore, in terms of product structure, Micron's revenue consists of US$22.4 billion from DRAM and US$7.8 billion from NAND Flash, accounting for 74% and 24% respectively.
As Chinese media Ijiwei reported, China-based Guojin Securities believes that the decision will greatly benefit Chinese memory makers which directly compete with Micron, such as Ingenic, CXMT, YMTC, and GigaDevice. Meanwhile, CITIC Securities believes that wafer procurement is temporarily unaffected in the module sector, but the customers downstream may switch orders, benefiting domestic module manufacturers.
Likewise, Huatai Securities believes that Chinese companies have already gained a foothold in the DRAM and NAND sectors. Currently, China's self-suffiency rate in the memory industry remains relatively low, and the Micron ban is expected to drive the substitution process in China's low- to mid-end memory sector.
However, according to CITIC, Chinese companies may also shift their memory module/wafer procurement orders to non-US vendors such as Samsung and SK Hynix, creating opportunities for suppliers in their supply chains. Similarily, the Capital Group suggests that the worst-case scenario would see Micron'completely withdrawing from the China's memory market, leading to short-term order shifts to competitors such as YMTC, Samsung, and SK Hynix.
Nevertheless, as Micron is the world's third-largest DRAM manufacturer and one of the top five NAND Flash chip manufacturers, it can redirect its sales efforts to other regions, according to the investment consultancy. After all, memory chip is a standardized product that can be sold anywhere, and the Capital Group estimates that this will only cause minor shifts in the market landscape without significant impacting global chip supply and demand or price fluctuations.
Meanwhile, Cyberspace Administration of China did not specify the security threats posed by Micron products, nor did it disclose which specific Micron products will be banned. The move has cast uncertainty on the prospects of other U.S. semiconductor companies heavily reliant on the Chinese market, such as Qualcomm, Broadcom, and Intel.
