China investigates foreign chipmakers including Micron and Samsung

How to protect yourself against chip flaw

Samsung and Micron Technology are being investigated by Chinese authorities as part of a probe that targets chipmakers based in South Korea and the United States.

Samsung (SSNLF) and US rival Micron (MU) said Monday that investigators from China’s State Administration for Market Regulation visited their offices in China on May 31.

They companies said they are cooperating with authorities. South Korea’s SK Hynix is also under investigation, according to the Wall Street Journal.

The Chinese regulator did not respond to a request for comment.

Shares in Samsung closed 0.4% lower in Seoul, while SK Hynix shed 1.8%. Micron shares dropped over 1% in New York.

Samsung and Micron, which is based in Boise, Idaho, did not comment on the subject of the investigation.

Bernstein analyst Mark Newman said Beijing may be worried about the rising price of memory chips.

“[The price increase] is causing some concern from China as their domestic [smartphone] handset makers get hurt by the high prices,” Newman said.

“China may also be using this price concern as a way to put pressure on the memory makers to share their [intellectual property],” he added.

Related: How China plans to beat the U.S. at technology

China purchases an estimated 90% of its semiconductors from foreign companies for use in everything from smartphones to automobiles.

Demand in the country, which already purchases more than 60% of the world’s chips, is expected to increase from $350 billion in 2016 to $500 billion by 2020, according to McKinsey.

The Chinese government wants to develop its own chip industry, and it has tried to buy stakes in US chipmakers at least twice. Both attempts were blocked by US authorities.

The country has been locked in a dispute with the United States over technology for months. The biggest flashpoint is Chinese smartphone maker ZTE (ZTCOF), which has been banned from buying parts, including chips, from American companies.

Related: Trade war: What you missed at the weekend

The White House has said it will impose tariffs on about $50 billion worth of Chinese goods following an investigation into the country’s handling of technology transfers and intellectual property.

Representatives from SK Hynix were not available after business hours.

— Sherisse Pham contributed reporting.

CNNMoney (London) First published June 4, 2018: 8:13 AM ET

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