Chinese Sales Restrictions on Micron Causing 'Significant Headwind,' Chip Company Says
Micron Techology is preparing for revenue losses caused by China’s recent sales restrictions on its products, saying in a recent Securities and Exchange Commission filing that Beijing “may prevent us from competing effectively with Chinese companies.” The U.S. semiconductor company said the restrictions are leading to “significant headwind” that “is impacting our outlook and slowing our recovery.”
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China in May announced the restrictions, which block Chinese companies involved in certain information technology infrastructure projects from buying Micron products (see 2305220053). Although the restrictions only apply to a certain set of firms, other Chinese businesses are also complying with the ban and are asking U.S. exporters to certify that their shipments don’t contain Micron products (see 2306230011).
Micron said it’s working to “mitigate this impact over time” but is expecting “increased quarter-to-quarter revenue variability.” Its revenue from Chinese customers accounts for about a quarter of its worldwide revenue, and “we currently estimate that approximately half of that China-headquartered customer revenue, which equates to a low-double-digit percentage of our worldwide revenue, is at risk of being impacted.”
The U.S. chip company said its customers, including its original equipment manufacturers, are being contacted by the Chinese government “concerning the future use of our products.” Additional actions by Beijing “could impact additional revenue inside or outside China, or our operations in China, or our ability to ship products to our customers, any of which could have a material adverse effect on our business, results of operations, or financial condition,” Micron said.