The decision underscores the deepening fallout from U.S.-China tech tensions and highlights how Washington’s semiconductor curbs — and Beijing’s retaliatory measures — continue to reshape global chip supply chains.
Fallout From Beijing’s 2023 Ban
Micron became the first U.S. chipmaker targeted by China last year when Beijing barred its memory products from use in “critical infrastructure,” citing national security concerns. The move was widely viewed as retaliation for Washington’s restrictions aimed at limiting China’s access to advanced semiconductor technology.
Since then, Micron’s data centre business in China — once a major revenue driver — has struggled to regain traction. Despite efforts to rebuild its client base, the ban effectively shut Micron out of the world’s second-largest server memory market, which has since been dominated by rivals Samsung Electronics, SK Hynix, and state-backed Chinese firms such as YMTC and CXMT.
Investment in Chinese data centres surged ninefold to 24.7 billion yuan ($3.4 billion) last year, according to a Reuters review of government procurement documents — growth from which Micron was largely excluded.
Lenovo to Remain a Customer
Despite its exit from China’s data centre segment, Micron will continue selling chips to two major Chinese customers with significant overseas operations, one of which is PC giant Lenovo, sources told Reuters.
The company, which derived roughly 12% of its $3.4 billion annual revenue from mainland China in the last fiscal year, will also maintain sales to Chinese automakers and smartphone manufacturers.
In a statement to Reuters, Micron acknowledged that its China data centre division had been affected by the government ban and reiterated that it “abides by applicable regulations where it does business.” Lenovo has not yet commented on the development.
Ongoing Tech Rivalry and Security Scrutiny
Micron’s withdrawal comes amid a broader U.S.-China standoff over technology access and national security. Since 2018, Washington has imposed sweeping sanctions, tariffs, and export controls on Chinese tech firms, including Huawei, while Beijing has responded with limited but targeted measures of its own.
Micron’s rivals Nvidia and Intel have also faced scrutiny from Chinese regulators and industry groups, accused of posing potential security risks, though neither has faced formal restrictions. All three companies have rejected claims that their products threaten China’s national security.
The U.S. currently maintains sanctions against hundreds of Chinese entities, while China — still heavily reliant on imported semiconductor technologies — has been cautious in escalating regulatory actions.
Global AI Boom Cushions Losses
While losing access to China’s fast-expanding server market is a blow, Micron’s global performance has been buoyed by surging demand for artificial intelligence infrastructure elsewhere. Explosive AI adoption has driven record sales of high-performance memory chips in North America and Europe, helping offset its China-related setbacks.
A source familiar with the matter said Micron’s data centre operations in China currently employ over 300 people, but it remains unclear how many positions could be affected by the planned exit.
The company has already scaled back its China operations in recent months. In August, Micron reportedly laid off several hundred employees from its universal flash storage unit, after deciding to end development of mobile NAND products globally.
However, Micron continues to expand in other areas — including its packaging and testing facility in Xi’an, which remains an integral part of its Asia supply network.
“China Remains an Important Market”
Despite retrenchments, Micron insists it is not turning its back on China entirely.
“We have a strong operating and customer presence in China, and China remains an important market for Micron and for the semiconductor industry in general,” the company said in a statement.
Still, the retreat from the Chinese data centre sector marks a symbolic moment for the Idaho-based manufacturer — highlighting both the risks of geopolitical friction and the shifting geography of the global chip industry.