Closing post
Timt ro recap…. here are today’s main stories so far:
Rail passengers in England could lose wifi access amid cost cuts
Train passengers face losing access to wifi after the government told rail companies to stop providing the service unless they can demonstrate its business case.
The move is being pushed by the Department for Transport (DfT) in order to cut costs as it looks to “reform all aspects of the railway”.
Most British train services now provide free wifi as standard but the DfT has told its contracted operators in England that they should cease offering it if they cannot justify it financially.
The department said it was looking for “value for money” and wifi was low on passenger’s priorities, particularly on shorter journeys.
More here.
Meta’s shares are rallying despite the company being hit by a record €1.2bn fine by Ireland’s privacy regulator over its handling of user information.
Shares in Meta have jumped 2.3% in early trading, to $251.25, extending their strong rally this year.
As we covered earlier, Meta has been given five months to stop transferring users’ data to the United States, after Ireland’s Data Protection Commission (DPC), ruled Facebook had broken rules requiring that transfers of personal data from the EU to the US had appropriate safeguards in place.
John Magee, Head of Data Protection, Privacy & Cybersecurity, at law firm DLA Piper Ireland predicts the suspension order will “probably bite much harder” for Meta, both operationally and commercially, than the record fine.
Leaving aside the specifics of the long-running case against Meta, the DPC’s decision also carries major implications for businesses across all sectors engaged in the day-to-day activity of international transfers of personal data.
Meeting the requirements of the Schrems II case has already proved a challenge even for the most sophisticated and well-resourced organisations. And while global data transfers are still possible to lawfully carry out, the DPC’s decision has now raised the stakes, focussing attention on the controls that organisations need to have in place as well as forcing businesses to think about their overall data governance strategies.
Daisy Fulton, lawyer at BDB Pitmans, predicts Meta could face similar legal headaches in the UK:
The eye-watering fine of €1.2bn was imposed on Meta Ireland for its failure to protect individuals’ personal data when sending that data to the US. Meta Ireland had failed to do this even after a European Court judgement had made it clear that those protections needed to be in place.
As the law in the UK is currently very similar to the EU, we may find the UK taking a similar approach. That means businesses in the UK who are transferring personal data to the US should sit up and take notice and ensure they have the necessary protective measures in place to avoid a large fine themselves.
American Airlines is challenging Micron for the bottom spot on the S&P 500 index.
American Airlines’s shares have dropped 4%, making it the second largest faller.
On Friday, an US federal judge has ruled a more than two-year-old alliance between American Airlines and JetBlue Airways was anticompetitive.
The judge ordered the two carriers to end the Northeast Alliance (NEA) within 30 days. Under the alliance the two airlines coordinated schedules at Boston Logan International Airport and at airports in the New York region.
Micron shares slide at the open
Ding ding ding goes the Wall Street opening bell, and down go Micron’s shares.
Micron’s shares have dropped by 4.5% at the start of trading, losing around $3 to $65.
They’re the biggest faller on the S&P 500 at the open.
Traders are trying to judge the financial impact of China’s ban on Micron’s use in key infrastructure projects, with CFO Mark Murphy predicting a single-digit percentage hit to revenues today.
Micron expects loss of sales after China flags ‘network security risks’
Micron chief financial officer Mark Murphy has told a conference today the company was unclear what concerns China had, after Beijing banned Micron’s products from key infrastructure projects due to security risks.
Reuters has the details:
He said Micron’s direct and indirect sales to China-headquartered companies accounted for about one-fourth of its total revenue.
“We are currently estimating a range of impact in the low single digits percent of our company total revenue at the low end and high single-digit percentage of total company revenue at the high end,” he said.
Just in: Israel’s central bank has increased borrowing costs to the highest level since 2006, as it continues to battle inflation.
The Bank of Israel voted to lift its main policy rate by a quarter of one percent, from 4.5% to 4.75%.
The central bank of Israel raised its key interest rate by another 25bps to 4.75% on May 22th 2023, highest since 2006, in line with market forecasts. https://t.co/kLQJXmhi3E pic.twitter.com/2ZhNk8tEJD
— TRADING ECONOMICS (@tEconomics) May 22, 2023
Amnnouncing the move, the Bank of Israel points out that annual inflation hit 5% in April (prices rose by 0.8% during the month.
The Bank is also concerned that inflation expectations, and forecasts, for consumer prices in a year’s time, are all around the upper bound of its target range
It says:
Economic activity in Israel is at a high level, and is accompanied by a tight labor market, although there is some moderation in a number of indicators. Inflation is broad and remains high. Therefore, the Monetary Committee decided to increase the interest rate.
The interest rate path will be determined in accordance with activity data and the development of inflation, in order to continue supporting the attainment of the policy goals.
Micron is still heading for a fall when Wall Street opens in around 90 minutes.
Shares in Micron are down over 4% in pre-market trading, after Beijign declared its products were a security risk and blocked their use in key infrastructure projects.
Brad Bechtel of Jefferies says:
China’s engaging on the chip tit-for-tat with the US by targeting Micron chips puts the focus squarely on South Korea to see if they will fill the gap with Samsung chips, something the US purportedly asked them not to do.
The geopolitical situation in the region continues to intensify.
Goldman Sachs have estimated that the US could run out of cash on 8th or 9th June unless the debt ceiling is lifted.
In a new report, Goldman Sachs estimates the current ‘extraordinary measures’ being used by the US Treasury, since it hit the US’s borrowing limit, will run out of space in under three weeks.
Goldman economists Alec Phillips and Tim Krupa wrote in the note to clients, which Bloomberg first reported, that the US could run out of cash sooner, saying:
“The estimate is subject to substantial uncertainty so there is certainly a chance that receipts could slow more than expected and leave the Treasury short of cash by June 1 or 2.”
Biden and McCarthy to speak on avoiding debt-ceiling disaster, Goldman Sachs says Treasury cash could dry up as soon as June 8, and US-China may be getting over the suspected spy balloon.
— Bloomberg (@business) May 22, 2023
Here's what markets are watching https://t.co/8yOKPd4BLb
Last weekend, US Treasury secretary Janet Yellen insisted that 1st June was a “hard deadline” for raising the federal debt limit. She suggested it was unlikely the government would collect enough revenue to tide them over until 15th June, when more tax receipts are due.
Yellen told NBC’s “Meet the Press” programme:
“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that that’s a hard deadline.”
New Democracy’s strong performance in last weekend’s election puts Greece on track to reclaim an investment-grade rating, 13 years after losing it, Bloomberg reports, adding:
The benchmark Athens Stock Exchange General Index jumped to its highest level in almost a decade, with a gauge of bank shares rising 16%.
The premium investors demand to hold Greek 10-year debt compared with super-safe bonds of Germany fell to the lowest in more than a year.
Full story: Facebook owner Meta fined €1.2bn for mishandling user information
Facebook’s owner, Meta, has been fined a record €1.2bn (£1bn) and ordered to suspend the transfer of user data from the EU to the US.
The fine imposed by Ireland’s Data Protection Commission (DPC), which regulates Meta across the EU, is a record for a breach of the bloc’s General Data Protection Regulation (GDPR).
The suspension of Facebook data transfers is not immediate and Meta has been given five months to enact it.
The DPC punishment relates to a legal challenge brought by an Austrian privacy campaigner, Max Schrems, over concerns resulting from the Edward Snowden revelations that European users’ data is not sufficiently protected from US intelligence agencies when it is transferred across the Atlantic.
The ruling does not impact data transfers at Meta’s other main platforms, Instagram and WhatsApp.
More here.
Facebook owner Meta has hit out against the €1.2bn (£1bn) fine announced today for breaching EU General Data Protection Regulation (GDPR) rules, calling it ‘flawed and unjustified’.
Nick Clegg, Meta’s president of global affairs, said the company was…
disappointed to have been singled out when using the same legal mechanism as thousands of other companies looking to provide services in Europe.”
This decision is flawed, unjustified and sets a dangerous precedent for the countless other companies transferring data between the EU and US.”
Updated
Greece’s stock market is roaring higher today, after the country’s right-wing New Democracy party claimed a strong first place in last weekend’s elections.
Athens’ ASE share index has jumped by 7% this morning, while Greek bonds are also strengthening in value, with investors anticipating a continuation of Greece’s current economic policies.
Greece’s conservative prime minister Kyriakos Mitsotakis hailed the result as a “political earthquake”, even though New Democracy didn’t quite win enough votes for a majority.
New Democracy party were heading for almost 41% of the vote, five seats short of a majority, and well ahead of the left-wing Syriza party led by former prime minister Alexis Tsipras, which won around 20% support.
Bill Blain, market strategist at Shard Capital, wrote this morning:
[Greece’s] right-wing government did surprisingly well in the polls telling us the public want experience, clarity and certainty – the economy is in recovery and may even win back investment grade status, but Greek friends tell me it still feels like austerity.
Today, Mitsotakis was handed a three-day mandate by Greece’s president, Katerina Sakellaropoulou, to explore the options of forming a coalition.
But, Mitsotakis would rather govern alone, as our Athens correspondent Helena Smith reports:
Aides said the 55-year-old leader, who appeared in ebullient mood as he arrived at New Democracy’s headquarters in Athens, would prefer a repeat poll with Sunday’s result hardening his view that a single-party government was “more than possible”.
In an address on Sunday night the prime minister said he was “proud and moved” by the result. “Hope has beaten pessimism, unity has beaten division,” Mitsotakis said.
“I pledge to work even harder. People want a strong government with a four-year mandate so that we can cover the lost ground that separates us from Europe. A government is needed that really must believe in reforms so that it can implement them.”
Heathrow: Passengers ‘should not be concerned’ about half-term strike
More travel news: Heathrow airport is pledging that next week’s strike by security staff will not lead to flight cancellations during the half-term rush.
Members of the Unite union working at Terminal 5 will walk out from May 25 to 27 in an ongoing dispute over pay.
But Heathrow has insisted that passengers will have a smooth journey through Heathrow during the half-term getaway.
Britain’s largest airport said said its contingency plans, which include deploying extra staff, have delivered “excellent passenger service” throughout previous strike periods, with “almost all” travellers waiting less than 10 minutes to pass through security.
Heathrow CEO John Holland-Kaye said:
“Passengers should not be concerned about strike action by Unite over the half term getaway. The 15 days of strike action over the Easter peak and Coronation weekends have had no impact on the smooth running of the airport, and passengers have not noticed any difference from the normal great service they expect at Heathrow.”
“These strikes are completely unnecessary. When I speak to colleagues the overwhelming message is that they just want to vote on our pay offer, but Unite won’t let them. We made a generous 10% offer early on, to make sure colleagues got a substantial increase when they needed it most. Unite’s delays mean non-union colleagues as well as the majority of colleagues who are union members, who voted to accept our previous offer are losing out.”
A year ago, Heathrow was gripped by disruption, with passengers suffering long queues and last-minute cancellations blamed on staff shortages.
Begbies Traynor Group, the business recovery, financial advisory and property services consultancy, has lifted its financial forecasts this morning.
Begbies Traynor told the City its results for the last 12 months are expected to be ahead of market expectations.
Russ Mould, investment director at AJ Bell, says this highlights problems in the wider economy.
“A better-than-expected trading update from corporate restricting group Begbies Traynor is good news for its shareholders, but typically a negative sign for the state of UK business.
It has reported an increase in liquidations and administrations which is a worry for the economy, so too is guidance from Begbies for further challenges to UK businesses.”
Revenue is expected to increase by 11% in the year to 30 April, with adjusted pretax profits tipped to grow by 16%.
Ric Traynor, executive chairman of Begbies Traynor Group, says:
“We performed strongly in the financial year, with results ahead of market expectations, aided by our increased scale and enhanced reputation in mid-market insolvency.
“We have further developed our range of services, extending both our financial advisory business and property advisory services through earnings accretive acquisitions principally funded by strong cash generation.
Back on the Micron-China news, Ben Barringer, equity research analyst at Quilter Cheviot, says chipmakers face potentially “politically treacherous waters.”
“Following a cyber security investigation China has decided to ban certain Micron memory products from the country, which will come as no surprise to many as it probably represents a retaliatory move following US restrictions on China’s access to technology.
“Around 11% of Micron’s revenue comes from China but we shall see how much this ban actually impacts its revenue because the ban is currently for domestic critical information infrastructure operators which is essentially used for defence, military and utilities. However, if this is broadened then it could put a dent in the company’s future revenues.
“The second unknown is the memory market is very homogenous. The two other major producers of similar technology are Samsung and Hynix and both companies have been asked by the US to not ship to China. How they respond will be key for Micron.
“Both the South Korean companies will now be closely watched to see how they behave in the face of the US request as they have manufacturing factories in China whereas Micron does not.
The companies may now need to navigate what could be politically treacherous waters.”
Shares in Meta are down 1% in pre-market US trading, after the company was hit by a record fine for EU privacy violations.
#UPDATE Facebook owner Meta has been fined a record 1.2 billion euros ($1.3 billion) for transferring EU user data to the United States in breach of a previous court ruling, Ireland's regulator announced Monday. pic.twitter.com/5G61GEJ8zR
— AFP News Agency (@AFP) May 22, 2023
Updated
Facebook owner Meta hit with record £1bn fine over EU-US data transfers
Meta has been hit with a record fine by regulators for mishandling user information.
Meta, the parent of Facebook, has been fined a record €1.2bn (£1.05bn) by Ireland’s Data Protection Commission following an inquiry.
This beats the previous record of €746m levied on Amazon by Luxembourg in 2021.
Metaa must also suspend any future transfer of personal data to the US within five months.
The DPC ruled that Facebook had violated its rules requiring platforms to ensure data transfers from Europe to the US have appropriate safeguards in place.
In today’s ruling, it says:
While Meta Ireland effected those transfers on the basis of the updated Standard Contractual Clauses (“SCCs”) that were adopted by the European Commission in 2021 in conjunction with additional supplementary measures that were implemented by Meta Ireland, the DPC found that these arrangements did not address the risks to the fundamental rights and freedoms of data subjects that were identified by the CJEU in its judgment.
Meta has been fined over its transfer of Facebook's European user data to US servers.@mattuthompson says that the record fine of $1.3 billion shows how seriously European regulators are taking GDPR breacheshttps://t.co/QZvC4I9blV
— Sky News (@SkyNews) May 22, 2023
📺 Sky 501 and YouTube pic.twitter.com/bu1RYbeGsz
The ruling relates to a legal challenge brought by an Austrian privacy campaigner, Max Schrems, over concerns resulting from the Edward Snowden revelations that European users’ data is not sufficiently protected from US intelligence agencies when it is transferred across the Atlantic.
My colleague Dan Milmo explained the background to the case here:
China’s commerce minister, Wang Wentao, has declared that the country will continue to welcome US-funded firms.
Speaking after Beijing barred Micron from selling memory chips to key domestic industries. Wang insisted that China was open to foreign firms.
He told a seminar in Shanghai that:
“China’s economy is recovering and improving, and the market potential continues to be released, which will provide more development opportunities for enterprises from all over the world, including U.S. companies.”
Back in the chip sector, shares in other US chipmakers are also under pressures,
Qualcomm and Broadcom are both down around 0.75% in pre-market trading.
House asking prices jump as confidence returns to UK housing market
The average price tag on a home reached a record high in May, as activity picked up across the housing market.
The average asking price jumped by £6,647 or 1.8% month-on-month, new data from Rightmove shows, lifting the average asking price for a home coming to market to £372,894.
This is the largest monthly increase for 2023 so far, and above the 1% increase typically seen during May.
Rightmove reports that sellers were cautious earlier this year, following the fallout from the mini-Budget. But with buyer demand 3% higher than in 2019, asking prices are moving higher.
Spring gets a late spurt of growth as buyer interest pics up for first & second steppers; resulting in AVG ASKING prices getting a 1.8% monthly inc (+£6,647) in May, to reach a new record of £372,894. Whilst those at the final rung lose sight of reality & buyers @rightmove pic.twitter.com/dAXC5Xlu84
— Emma Fildes (@emmafildes) May 22, 2023
This doesn’t mean that houses are selling for record levels, though. Official data shows that house prices in February were £5,000 below the recent peak in November 2022, while Nationwide reports that prices rose in April after seven months of declines.
Higher mortgage rates, following 12 interest rate increases in a row, mean borrowing to buy a new home is rather more expensive than in 2021.
Tim Bannister, Rightmove’s Director of Property Science, says:
“This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season. One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely.
What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years. Steadying mortgage rates and a generally more positive outlook for the economy are also contributing to more seller confidence, though there are likely to be more twists and turns to come.
The market is still very price-sensitive and it is important that new sellers do not damage their prospects of a sale by overpricing initially and reducing later, with agents reporting that it’s the realistically-priced new instructions that are selling best.”
Rightmove reports that demand is being driven by the first-time-buyer and second-stepper sectors, while houses at the top of the market are taking longer to sell:
"Buyer demand is 1% lower than in 2019 for top-of-the-ladder properties, compared with 3% above 2019’s level in the second-stepper sector, and 6% above in the first-time-buyer sector" @rightmove pic.twitter.com/4PLGxoHbHc
— Emma Fildes (@emmafildes) May 22, 2023
Key event
European stock markets have made a mixed start to trading, as investors digest China’s ruling that products made by US memory chip giant Micron Technology are a national security risk.
The UK’s FTSE 100 has gained 0.3% or 22 points to 7,779 points, but France’s CAC and Germanys DAX are both down around 0.1%, with the US debt ceiling deadline also on traders’ minds.
Saxo’s strategy team told clients this morning:
After a cyber-security review, China’s Cyberspace Administration of China ordered that Chinese companies dealing with critical information stop buying chips from US-based Micron Technology.
The review said that Micron’s chips posed “relatively serious cybersecurity problems” that could “seriously danger the supply chain of China’s critical information infrastructure.” The move was widely viewed as a retaliation against recent US limitations on exporting high-end chips and chip-manufacturing equipment to China.
A US Commerce Department spokesperson said the move has “no basis in fact”. Mainland China and Hong Kong revenue exposure is around 15% of total revenue for Micron Technology.
China’s ban on Micron products in critical national infrastructure is a possible escalation of Trade War rhetoric, says Neil Wilson of Markets.com.
He adds:
Biden says ties with China to improve “very shortly”...not sure if he is reading the same script as everyone else?
Shares in Micron have dropped over 6% in pre-market US trading, after China ruled its products posed “serious network security risks”.
That follows the 5% drop in Frankfurt trading this morning (see earlier post), in the light of China banning operators of key infrastructure from buying Micron chips.
Updated
Wheat price hits two-year low
The price of wheat has dropped to the lowest level in over two years, which may bring some relief to struggling households worldwide.
Chicago wheat futures fell below $6 a bushel, the lowest since April 2021. They were pushed down by expectations of ample global supplies after the deal to ship Ukrainian grains was extended last week.
One Singapore-based grains trader told Reuters:
“Global wheat market seems to be well-supplied even though there are some worries around the U.S. winter crop.”
Compared to January 2021, maize prices are 13% higher, while wheat and rice prices are 6% and 4% lower, respectively.
— World Bank Publications (@WBPubs) May 22, 2023
More on food commodities in our latest food security update: https://t.co/zXqPUCHt6v pic.twitter.com/iswXGCragc
The most-active wheat contract on the Chicago Board of Trade dipped over 1% this morning to $5.98 a bushel, the lowest since April 2021.
Last week, the Ukraine Black Sea grain deal was extended for two more months, easing concerns over world supplies.
Worries about the ongoing US debt ceiling talks have also weighed on the agricultural markets, on fears that the US could default if the limit is not raised soon.
US president Joe Biden and House Republican speaker Kevin McCarthy are expected to discuss the issue later today, after holding a “productive” phone call on the continued impasse over the debt ceiling on Sunday.
Ryanair predicts strong summer after profit jump
Ryanair has bounced back to a near-record €1.4bn (£1.2bn) profit last year and expects to better that in 2023, fuelled by a summer boom in which the low-cost airline will carry a record number of passengers.
Europe’s largest airline swung back to profit in the year to the end of March after reporting a €355m loss in the previous year. The company, led by the chief executive, Michael O’Leary, said it was cautiously optimistic that it will increase profits again this year, which could result in it topping the record €1.45bn Ryanair made in 2018.
“To date, summer 2023 demand is robust and peak summer 2023 fares are trending ahead of last year,” O’Leary said, adding:
“First-quarter fares, which benefited from a strong Easter in April – and a very weak previous year comparable due to Russia’s invasion of Ukraine – will be significantly higher than the first quarter of 2022-23.”
The airline, which earlier this month spent $40bn (£32bn) on 300 new aircraft from Boeing in a bet it can continue to outperform European rivals, carried a record 168 million passengers last year.
More here:
Micron shares drop in Frankfurt
Shares in Micron, listed in Frankfurt, have dropped by over 5% in “thin early morning deals”, Reuters reports, as traders respond to Beijing banning its chips from use in key domestic industries.
Updated
UK government cuts stake in NatWest
In the UK, the government has cut the taxpayer’s stake in NatWest bank, which it bought in the financial crisis.
NatWest has agreed to buy around 469m shares from HM Treasury at a price of 268.4p per share – the price at which they closed on Friday night.
This will cost £1.3bn, and reduce government’s stake in NatWest to 38.69% from around 41% today.
NatWest’s CEO, Alison Rose says the deal “demonstrates positive progress” on the bank’s strategic priorities and the path to privatisation.
Rose adds:
NatWest Group’s robust balance sheet and capital generation allow us to continue lending responsibly and supporting the customers and communities we serve whilst delivering sustainable returns to our shareholders, including the government.”
At its peak in 2009, the UK government owned 84% of NatWest – which was previously called Royal Bank of Scotland before a post-crash rebrand.
Victoria Scholar, head of investment at interactive investor, explains:
Last month the government announced a two-year extension to its trading plan. The Treasury is aiming to return NatWest to private ownership by 2025-2026 while attempting to ‘achieve the best value for the taxpayer’.
In April, the government’s shareholding stood at 42%, down from a peak of 84%, falling further again this week.
Shares in NatWest have struggled this year, caught up in the banking sector turmoil with the collapse of SVB and the rescue deal for Credit Suisse. However, with shares up almost 15% year-on-year to Friday’s close, the government clearly decided that now is a good moment to sell some shares.
Jefferies analysts expected limited impact on Micron, though.
They argue that its major customers in China are consumer electronics firms such as smartphone and computer manufacturers, not infrastructure suppliers.
In a research note, Jefferies say:
“Since Micron’s DRAM and NAND products are much less in servers, we believe most of its revenue in China is not generated from telcos and the government.
Therefore, the ultimate impact on Micron will be quite limited.”
It generated $5.2bn of revenue from China including $1.7bn from Hong Kong last year, about 16% of its total revenue, according to Jefferies.
The announcement that Micron had failed China’s security review helped to boost shares in some local chipmaking-related firms on Monday
State media reported that domestic players could benefit from the move.
Shares in Ingenic Semiconductor,a fabless semiconductor company based in Beijing, are up 2.5% in late trading, while Shenzhen Kaifa, which designs, tests and manufacturers semiconductors, are 2% higher.
Some of Micron’s major rivals also saw their shares gain. SK Hynix are up 0.8%, although Samsung Electronics dipped back after an early rally.
Shares in Chinese chip-related stocks had also jumped in April when Beijing launched the probe into Micron.
Bernstein analysts said in a note that:
“As China’s domestic memory suppliers are not competitive in technologies and capacity, China would need to resort to Samsung, SK Hynix, Kioxia, Western Digital or other foreign suppliers as the alternative to Micron.
Beijing’s move against Micron brings fresh uncertainty to the other US chipmakers that sell to China, the world’s biggest market for semiconductors.
Holden Triplett, founder of Trenchcoat Advisors and a former FBI counterintelligence official in Beijing, says (via Bloomberg):
“No one should understand this decision by CAC as anything but retaliation for the US’s export controls on semiconductors.
“No foreign business operating in China should be deceived by this subterfuge. These are political actions pure and simple, and any business could be the next one to be made an example of.”
Introduction: China bars Micron chips in escalation of tech clash with US
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Tensions between Washington and Beijing are rising after China announced that products made by US chipmaker Micron Technology have failed to pass a cybersecurity review.
China’s government told users of sensitive computer equipment they must stop buying products from Micron, the biggest US memory chipmaker.
Micron, China says, had failed a network security review announced last month, meaning operators of key infrastructure are now barred from buying from the company.
Announcing the move, the Cyberspace Administration of China (CAC) said:
The review found that Micron’s products have serious network security risks, which pose significant security risks to China’s critical information infrastructure supply chain, affecting China’s national security.
The decision could include sectors ranging from telecoms to transport and finance, according to China’s broad definition of critical information infrastructure.
Micron, which is headquartered in Boise, Idaho, makes products including DRAM chips, flash memory, and solid state hard drives. through its Crucial, Ballistix Gaming and SpecTek brands.
The move escalates the ongoing US-China row over technology and security. Last November, the Biden administration banned approvals of new telecommunications equipment from China’s Huawei Technologies and ZTE, saying they posed “an unacceptable risk” to U.S. national security.
A spokesperson from the US Commerce Department has criticised China’s move, saying:
“We firmly oppose restrictions that have no basis in fact,”
“This action, along with recent raids and targeting of other American firms, is inconsistent with [China’s] assertions that it is opening its markets and committed to a transparent regulatory framework.”
Shares in some rival chipmakers rose on the news (more on that shortly…).
The Micron ban came as G7 leaders, who met in Hiroshima last weekend, announced they want to de-risk from China, rather than decouple.
Joe Biden explained:
“That means taking steps to diversify our supply chains.”
Rishi Sunak went further, saying China poses the biggest challenge to global security and prosperity of our age.
The UK PM warned that China has the “means and intent to reshape the world order”, and that G7 leaders had shown “unity and resolve” in confronting the problems posed by Beijing.
The agenda
10am BST: Eurozone construction output for March
2pm BST: Bank of Israel interest rate decision
3pm BST: Eurozone consumer confidence flash estimate for May
Updated
