Why Micron is pulling out of the data-center chip business in China

By Britney Nguyen

The memory-chip maker reportedly hasn't recovered from a Chinese government ban on part of its chip business in 2023

Micron will reportedly no longer supply data-center chips to China.

Micron Technology Inc. is reportedly pulling out of the data-center semiconductor business in China, after having a difficult time recovering in that segment after a ban on its products by the Chinese government in 2023.

The company (MU) said, however, that it will continue selling to two Chinese customers that have a large data-center presence outside of the country, Reuters reported, citing unnamed people familiar with the situation. One of those customers is reportedly Lenovo Group Ltd. (LNVGY) (HK:992).

The memory-chip maker will also reportedly continue selling chips to customers in the automotive and mobile-phone industries. In 2024, sales to mainland China made up 12% of Micron's total revenue, or $3.4 billion, according to the report. Micron's revenue from mainland China and Hong Kong makes up about 10% of its total sales from the past 12 months, according to FactSet.

Lenovo did not immediately respond to MarketWatch's request for comment.

Shares of Micron were down more than 2.5% in recent morning trading, but had been down as much as 4.3% in premarket trading following the report. The company's stock has rallied 134.7% so far this year to be the PHLX Semiconductor Index's SOX biggest gainer over that time, as well as among the S&P 500 index's SPX top performers, due to high demand for Micron's memory components for artificial-intelligence chips.

In comparison, shares of AI-chip leader Nvidia Corp. (NVDA) are up 35.3% in 2025.

In May 2023, the Cyberspace Administration of China told local operators to stop buying products from Micron due to "serious network security risks" to the country's critical information infrastructure.

A Micron spokesperson said in a statement shared with MarketWatch that the company's data-center chip business was impacted by the Chinese government's ban and that it will continue to provide its memory products to customers, "while respecting and abiding by applicable laws and regulations everywhere we do business."

The chip maker has "a strong operating and customer presence in China, and China remains an important market for Micron and the semiconductor industry in general," the spokesperson said, adding that the company's assembly and test manufacturing site in Xi'an remains a part of its global presence.

Micron is one of the world's three leading memory-chip makers, alongside South Korea's SK Hynix Inc. (KR:000660) and Samsung Electronics Co. (KR:005930). The South Korean companies have benefited from Micron's ban in China, according to Reuters, as have local memory-chip makers that have government support. The publication found that the Chinese government's investment in data centers increased by nine times, to $3.4 billion, in 2024.

Fellow U.S.-based chip makers Nvidia and Advanced Micro Devices Inc. (AMD) have also come under scrutiny by the Chinese government amid broader trade tensions with the U.S. The Chinese government has encouraged local tech companies to use homegrown chips from companies such as Huawei.

See more: Nvidia is dealt an antitrust setback in China. What it means for the stock.

In September, China's State Administration for Market Regulation said it had found in a preliminary investigation that Nvidia had breached the country's antitrust rules when it acquired networking-technology company Mellanox in a deal that closed in April 2020.

The regulatory authority's announcement was referred to as "pure posturing" by Mizuho desk-based analyst Jordan Klein at the time. However, Klein said that investors should keep in mind that Nvidia's upside potential for revenue and earnings is still tied to the restart of its sales to China.

Read: Nvidia and AMD reportedly strike deals with Trump - but analysts see a 'slippery slope.'

-Britney Nguyen

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10-17-25 1125ET