TLDR
- Micron Technology is pulling out of China’s data center server chip market after its business never bounced back from Beijing’s 2023 ban on critical infrastructure
- The chipmaker will keep selling to Lenovo and one other Chinese customer for their overseas data center operations
- Micron earned $3.4 billion from China last year, representing 12% of total revenue, but will maintain auto and mobile chip sales there
- Samsung, SK Hynix, and Chinese firms captured China’s $3.4 billion data center boom while Micron sat on the sidelines
- The company’s China data center team has over 300 employees facing an uncertain future
Micron Technology is walking away from China’s server chip market. The company decided to exit after two years of trying to recover from Beijing’s ban proved futile.
Two sources familiar with the decision confirmed Micron will stop supplying server chips to Chinese data centers. The 2023 government ban targeted the company’s products in critical infrastructure.
Micron became the first U.S. chipmaker in Beijing’s crosshairs. Analysts viewed the ban as payback for Washington’s restrictions on China’s semiconductor industry.
The company generated $3.4 billion from mainland China in its most recent fiscal year. That’s 12% of Micron’s total revenue walking out the door.
But the story isn’t all doom and gloom for Micron’s China presence. The chipmaker will keep two Chinese customers on the books.
Both companies run large data center operations outside China. One is laptop manufacturer Lenovo, according to sources.
Keeping a Foothold in China
Micron plans to maintain its automotive and mobile phone chip business in China. These sectors weren’t hit by the infrastructure ban.
The company told Reuters it recognizes the impact on its data center division. Micron said it follows all applicable regulations where it operates.
Lenovo hasn’t commented on the news. Micron declined to provide details beyond its official statement.
China represents the world’s second-largest market for server memory chips. The ban locked Micron out just as China’s data center industry exploded.
Investment in Chinese data centers jumped ninefold last year. The total reached 24.7 billion yuan, or roughly $3.4 billion.
Samsung Electronics and SK Hynix grabbed the market share Micron left behind. Chinese companies YMTC and CXMT also benefited with heavy government backing.
The Bigger Picture
Nvidia and Intel have faced similar heat from Chinese authorities. Both companies saw their chips accused of security risks by Chinese industry groups.
Neither Nvidia nor Intel has faced actual regulatory bans yet. All three U.S. chipmakers have denied their products pose security threats.
The trade war between Washington and Beijing has intensified since 2018. President Trump launched the first wave of tariffs during his initial term.
The U.S. currently sanctions hundreds of Chinese entities. China has taken fewer actions but focuses its moves strategically.
What’s Next for Micron’s China Operations
Micron’s China data center team employs more than 300 people. The company hasn’t said how many jobs will be cut.
The chipmaker already downsized other China operations this year. It laid off several hundred employees from its flash storage program in August.
Micron continues expanding its chip packaging facility in Xian. The company maintains it values China as an important market.
Global AI demand has cushioned the blow from China’s ban. Micron posted record quarterly revenue thanks to surging data center needs worldwide.
Chinese customs recently cracked down on U.S. chip imports. Beijing is pushing its “AI plus” self-reliance strategy across the technology stack.
Micron will continue serving Chinese automotive and mobile customers while rivals dominate the data center space the company once competed for.
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