Micron to Halt Server Chip Supply to Chinese Data Centers

Micron Technology has decided to halt the supply of its server chips to data centers in China after the business failed to recover from a 2023 government ban on its products used in critical infrastructure, according to sources familiar with the matter.

Micron was the first U.S. chipmaker to face restrictions from Beijing, a move widely viewed as a response to Washington’s ongoing efforts to limit China’s semiconductor industry advancements. Since then, both Nvidia and Intel have also come under scrutiny from Chinese authorities over alleged security risks, though no formal regulatory measures have been taken.

Despite the withdrawal from China’s data center market, Micron will continue supplying chips to two major Chinese clients that operate data centers outside the country, including Lenovo. The company will also maintain its business relationships in China’s automotive and mobile phone sectors, which continue to generate significant demand.

Micron confirmed in a statement to Reuters that its data center business had been affected by the Chinese ban and reiterated that it complies with all applicable regulations in every market it operates. The company earned $3.4 billion, or 12% of its total annual revenue, from mainland China in its last fiscal year.

Impact of US-China Tech Tensions

The decision reflects the ongoing U.S.-China tech tensions that began in 2018 when then-President Donald Trump imposed tariffs on Chinese goods. Washington later accused Huawei of being a national security threat and imposed sanctions, which Huawei has repeatedly denied. Similarly, Nvidia, Intel, and Micron have all refuted claims that their products pose security risks.

Currently, the U.S. has blacklisted hundreds of Chinese entities, while Beijing has taken relatively fewer regulatory measures, though it remains heavily dependent on imported technology.

China’s 2023 ban on Micron products in critical infrastructure, which is the world’s second-largest market for server memory, has excluded the U.S. company from the country’s booming AI and data center expansion. This gap has been filled by competitors like Samsung Electronics, SK Hynix, and domestic chipmakers YMTC and CXMT, who have benefited from strong government backing.

Investment in data centers across China surged to 24.7 billion yuan ($3.4 billion) last year, according to a Reuters review of official procurement data. Despite the setback, Micron has offset losses in China with growing global demand for AI-driven computing infrastructure, leading to record quarterly revenues.

Sources say Micron’s data center team in China employs over 300 people, though it remains unclear how many jobs could be affected by the decision. The company previously laid off several hundred workers in 2024 as part of its broader restructuring efforts, while continuing to invest in its chip packaging facility in Xi’an.

“China remains an important market for Micron and the global semiconductor industry,” the company stated, emphasizing its continued presence in the country despite the recent challenges.