Micron Technology MU-Q on Friday warned of a bigger hit to revenue from a Chinese ban on sale of its chips to key domestic industries, sending the memory chipmaker’s shares down about 2 per cent.
The company said it now expects an impact on about half of its revenue from China-headquartered firms, which equates to a low-double-digit percentage of its total revenue. It had earlier flagged a hit in the low-single to high-single digit percentage.
Micron was the first U.S. chipmaker to be targeted by Beijing after Washington imposed a series of export controls on certain American components and chipmaking tools to ensure that they are not used to advance China’s military capabilities.
The Cybersecurity Administration of China said in May that Micron failed its security review and barred operators of key domestic infrastructure from purchasing the biggest U.S. memory chipmaker’s products. It had neither provided details on what risks it had found nor what Micron products would be affected.
The company said on Friday that the conclusion by the Chinese regulator “continues to remain uncertain and fluid.”
It also added that several customers, including mobile manufacturers, were being contacted by Chinese government representatives about the future use of Micron products.
Micron’s revenue from companies headquartered in mainland China and Hong Kong, including direct sales as well as indirect sales through distributors, accounts for about a quarter of its total revenue.
The company earlier in the day said it would invest 4.3 billion yuan ($603.8-million) over the next few years in its chip packaging facility in the Chinese city of Xian, a move that CEO Sanjay Mehrotra said demonstrated the company’s “unwavering commitment to its China business and team.”