China’s chip stocks rise after Beijing says Micron is ‘security risk’

China’s chip stocks rose on Monday morning after Beijing’s announcement to block some purchases of products from US memory chip maker Micron.

China’s Cyberspace Administration barred operators of “critical information infrastructure” in China from buying products from the US chip giant following a security review by the Cyberspace Administration of China.

Chinese authorities said Micron products have failed their network security review, citing “serious potential network security issues.” The firm poses a “major security risk” to China’s supply chain for critical information infrastructure and impacts [its] national security, says a statement.

Shares of Chinese chip makers were mostly up on Monday after the move: Hong Kong-listed Hua Hong Semiconductor rose a whopping 3.14% on Monday, while SMIC rose 2.64%.

Other memory chip makers in mainland China, such as GigaDevice Semiconductor and Ingenic semiconductor, rose 3.74% and 8.08%, respectively.

In response to Beijing’s announcement, US Commerce Secretary Gina Raimondo told the Wall Street Journal: “We firmly oppose restrictions that have no basis in reality.” The Commerce Department will work with the Chinese government to “detail” its position and seek further clarity, he added.

Raimondo said the US would engage with its key allies to address Beijing’s actions and that such measures would cause “distortions of the memory chip market”.

This comes as the US reportedly urged South Korean chipmakers not to fill shortages in China if Beijing’s ban goes into effect, the Financial Times reported.

Shares in South Korean chipmakers SK Hynix and Samsung Electronics, both Micron rivals, rose on Monday morning.