Investing.com– Asian semiconductor stocks rose on Monday amid bets that Chinese and South Korean chipmakers will benefit from Beijing’s decision to bar U.S. company Micron Technology Inc (NASDAQ:MU) from selling memory chips to key domestic industries due to security concerns.
Late on Sunday, China’s cyberspace regulator announced that Micron had not passed its network security review, resulting in a ban on the sale of the company’s products to operators of critical infrastructure within the country.
The regulator did not provide specific details about the risks discovered or which products from the leading U.S. memory chipmaker would be impacted.
While Washington opposed the decision, stocks of Micron’s competitors in China and other regions rose on bets that mainland companies would have to source their memory products from alternative suppliers.
Shares in companies such as China’s GigaDevice Semiconductor Beijing Inc (SS:603986), Ingenic Semiconductor (SZ:300223), and Shenzhen Kaifa Technology Co Ltd (SZ:000021) rose in early trade. Additionally, shares of Micron’s major South Korean rivals, Samsung Electronics (OTC:SSNLF) Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), saw their shares rise between 0.5% and 2%.
The development marks an escalation in tensions between Washington and Beijing, following Chinese raids on U.S. regional offices of U.S. firms. This was preceded by the U.S. announcing strict controls on chip exports to Chinese firms, blocking them off from the latest advancements in chipmaking.
Micron is the first U.S. chipmaker targeted by Beijing following a series of export controls implemented by Washington on specific American components and chipmaking tools intended to prevent their use in advancing China’s military capabilities.
The security review, launched in late March, was initiated during a time of dispute over chip technology and deteriorating relations between Washington and Beijing. This latest incident occurs just after the Group of Seven nations agreed to “de-risk, not decouple” economic engagement with China, with U.S. President Joe Biden advocating for an “open hotline” between the two nations.
Still, broader Chinese and South Korean stocks also advanced amid optimism that U.S.-China ties could improve after Biden hinted at new measures to soothe ties.
Disclaimer: This article was written with the assistance of an artificial intelligence tool.