Micron Technology, Inc. (NASDAQ:MU) is among the three chipmaking that are simultaneously being investigated by Chinese regulatory agents. Micron Technology says representatives from China’s State Administration for Market Regulation authorities had visited its office in China, a move the will likely open another battle front in the ongoing trade dispute between the U.S and China. Of the three countries being investigated, two are from South Korea while one is from the U.S. The other two companies that are being investigated are SK Hynix and Samsung Electronics.
Reasons for the probe
It remains unclear if the probe is attached to the class action lawsuit that was filed back in April in the federal district court of northern California. The lawsuit was filed by law firm Hagens Berman representing consumers in the U.S and accuses the companies of price fixing of DRAM, a computer memory chip which powers almost all computers and a majority of electronic devices. The three companies being investigated collectively control 94% of the world DRAM chip market. In the first quarter of 2018, Micron accounted for 22.6% of the total market share.
Despite being the largest maker of semiconductors, China is not home to even one of the 10 leading producers of crucial electronic components, with much of the market dominated by the three companies.
Chinese government working to boost its own supply of semiconductors
Last year, Micron got around half of its sales from China, according to a report by Bloomberg. China has spent a lot of time and resources in developing and boosting its domestic supply of semiconductors.
Currently both the U.S and China are engaged in trade talks regarding the fate of ZTE Corp, the second-largest maker of telecommunications equipment in China. The U.S. banned the company from purchasing crucial components from the country. This was after it was found to be going against sanctions against sales to Iran.
This ban brought ZTE on its knees and crippled virtually all its operations. This is because it largely depends on components imported from the U.S. On the hand Qualcomm, the largest producer of phone chips, is waiting for the outcome of the U.S-China talks so as to have its acquisition of NXP Semiconductors NV from China Approved.