Micron Technology, the U.S. semiconductor manufacturer, is pulling out of China’s data center chip market after the business failed to recover from Beijing’s 2023 ban on its products in critical infrastructure, Reuters reports, citing two people briefed on the decision.
The move points to the deepening decoupling between the world’s two largest economies in advanced technology sectors and highlights how Washington’s trade restrictions have triggered retaliatory measures from Beijing, reshaping the global semiconductor industry.
Micron was the first major American chipmaker to be directly targeted by the Chinese government, a move widely interpreted as retaliation for U.S. export controls aimed at curbing China’s access to advanced chips and manufacturing equipment. The company’s withdrawal signals that the lingering effects of the ban have rendered its data center operations in China commercially unviable.
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Micron shares slipped about 1% following reports of its exit. In a statement to Reuters, the company acknowledged that the data center division had been impacted by the ban and emphasized that it “abides by applicable regulations where it does business.”
Micron will continue to supply chips to two Chinese companies that operate major data centers outside mainland China, including Lenovo, the Hong Kong–listed technology giant. However, its domestic data center business in China will wind down. Micron generated about $3.4 billion — roughly 12% of its total revenue — from mainland China in its most recent fiscal year, with the bulk of that coming from sales to smartphone and automobile manufacturers. Those segments will continue, according to one of the sources.
Industry analysts said the company’s strategic withdrawal reflects a broader realignment of semiconductor supply chains.
“Micron will look for customers outside of China in other parts of Asia, Europe and Latin America,” said Jacob Bourne, an analyst at Emarketer. “China is a critical market, however, we’re seeing data centre expansion globally fueled by AI demand, and so Micron is betting that it will be able to make up for lost business in other markets.”
The company’s exit also comes amid heightened U.S.-China tensions that have persisted since 2018, when then-President Donald Trump imposed sweeping tariffs on Chinese goods and tightened scrutiny on technology transfers. Washington subsequently targeted Chinese tech firms such as Huawei, accusing them of posing national security threats — allegations Beijing and the companies involved have consistently denied.
Micron’s troubles began in May 2023 when China’s cyberspace regulator barred its chips from being used in key infrastructure, claiming the products posed “significant security risks.” The U.S. government responded by calling the move “economic coercion” and defending the security of American chip technologies. Although China has since expanded its domestic chipmaking capacity, the action against Micron marked one of its few large-scale regulatory interventions against a U.S. firm in response to Washington’s sanctions.
The ban has cost Micron dearly in what remains the world’s second-largest market for server memory chips. Chinese investment in data centers surged ninefold last year to 24.7 billion yuan ($3.4 billion), according to a Reuters review of government procurement records. That boom has instead benefited Micron’s global rivals — South Korea’s Samsung Electronics and SK Hynix — as well as Chinese semiconductor firms YMTC and CXMT, which are expanding with heavy state support.
While Micron has struggled to regain its footing in China, the company has simultaneously been buoyed by the explosion in demand for artificial intelligence infrastructure elsewhere. The global buildout of AI-driven data centers has helped offset its losses in China, allowing Micron to post record quarterly revenue this year.
Even so, the company continues to scale down parts of its Chinese operations. Reuters reported that Micron employs over 300 people in its China data center team, though it is unclear how many positions may be affected by the pullout. The chipmaker also laid off several hundred employees in August from its universal flash storage program in China after announcing it would end development of mobile NAND products globally.
However, Micron maintains a significant presence in the country through its packaging and testing facility in Xi’an, one of its largest operations outside the United States.
“We have a strong operating and customer presence in China, and China remains an important market for Micron and the semiconductor industry in general,” the company said in its statement.
For now, Micron’s exit from China’s data center market signals a turning point in the long-simmering tech rivalry between Washington and Beijing. As both powers deepen restrictions on each other’s technology sectors, global semiconductor supply chains are being redrawn. While Chinese chipmakers continue to ramp up local production, American firms are accelerating efforts to diversify markets and reduce supply to China.
The consequence, experts say, is a more fragmented global tech ecosystem — one in which geopolitical considerations increasingly shape where and how advanced chips are produced, sold, and deployed.