FirstFT Asia: China bans US chipmaker Micron

Good morning. China has said that US chipmaker MicronTechnology’s products posed “serious network security risks’‘ and banned operators from buying them. The decision comes amid escalating tensions between the world’s superpowers and marks the first big measure taken against an American semiconductor group. 

The Cyberspace Administration of China on Sunday announced that the company, which is the biggest US maker of memory chips, “posed significant security risks to China’s critical information infrastructure supply chain”.

The move follows a seven-week investigation into the Idaho-based Micron by the CAC, a probe that was seen as retaliation for US efforts to curb China’s access to key technology. Last October, Washington introduced extensive chip export controls and the Netherlands and Japan have since followed. 

China is an important market for Micron and analysts warned that Beijing’s restrictions could even prompt Chinese companies that did not provide “critical information infrastructure” to seek to eliminate Micron from their supply chains.

Here’s what I’m watching today:

• Turkey election: Turks return to the polls to vote on the presidential run-off, where incumbent Recep Tayyip Erdoğan remains the favourite to win.

• US debt ceiling: Joe Biden returns from the G7 summit to try to resolve the US deficit ceiling impasse.

Who will win the US-China tech war? Join leading FT journalists and a Nikkei Asia colleague for a subscriber-exclusive webinar on May 25 and put your questions to the panel.

Five more top stories

1. Vladimir Putin claims Russian forces have captured the eastern city of Bakhmut, despite Kyiv insisting the battle “was not over.” The battle of Bakhmut has been the longest and bloodiest fought in Ukraine, claiming more than 100,000 casualties and reducing the city to ruins. Read more about what Russia is hailing as its first major victory since the invasion.

2. The G7 issued its strongest condemnation of China, citing concerns over the rising military and economic security threats posed by Beijing. G7 members are “seriously concerned” about events in the East and South China seas and urged Beijing to push Russia to withdraw its troops from Ukraine. 

• Also at the G7: Ukrainian president Volodymyr Zelenskyy called on Brazil and India to unite behind his proposal to end Russia’s war, confronting the two countries’ leaders who have worked to maintain close ties with Moscow.

3. Bhutan is turning to crypto and drone technology in search of fast growth and returns. The Himalayan kingdom is teaming up with Singapore’s Bitdeer, one of the world’s largest bitcoin miners, to raise up to $500mn for a crypto mining business despite sell-offs, contagion, and scandals that have rocked the sector. Read more about the country’s new crypto venture.

4. Allen & Overy is merging with New York’s Shearman & Sterling to form a law practice with combined revenues of about $3.4bn, in one of the biggest transatlantic legal tie-ups in history. Both firms said they were seeking to build stronger expertise in private equity, life sciences and energy transition. Read more about how Allen & Overy’s bid to conquer the US market.

5. Exclusive: One of the world’s top media agencies has told clients it no longer considers Twitter “high risk”, just days after Elon Musk appointed advertising stalwart Linda Yaccarino as the social media platform’s new chief executive. The decision by WPP-owned GroupM is likely to lead to an increase in spending on the platform by clients, people close to the company said.

How well did you keep up with the news this week? Take our quiz.

The Big Read

Late on Thursday afternoon, investors across the world received a note titled Japan’s Rising Sun. According to investors, a confluence of factors, economic and geopolitical, has made Japan more interesting than it has been for some time. A few hours before Japan’s Rising Sun hit inboxes, the broad Topix index of Japanese stocks had hit a fresh 33-year high on a rally driven by an exceptional six straight weeks of buying by foreign institutions. Japan is at last allowing itself — and being granted — some swagger. The question is, how long will the phenomenon last?

We’re also reading . . . 

• The AI revolution transforming education: Since ChatGPT, arrived on the scene last year, the powerful, freely available AI software has prompted intense speculation about the long-term repercussions on a host of industries. But nowhere has the impact been felt more immediately than in education, write Bethan Staton and Madhumita Murgia.

• China’s comedy crackdown: The investigation into and fining of a stand-up comedian in Beijing after a performance last weekend has revived worries about free speech in China and the role of comedy in Xi Jinping’s increasingly authoritarian state.

• Mass redundancies: There is a wave of mass redundancies that has been ripping through industries, mainly in tech. There is plenty of evidence that the human toll of being laid off can be dire, but what if job cuts have become such a standard business practice that they are changing the nature of the workforce, asks FT columnist Pilita Clark 

Chart of the day

Investors are ploughing money into emerging market local currency bonds, as high interest rates and falling inflation make them increasingly attractive compared with dollar assets. This year, local bonds performed better as currencies including the Mexican peso and Brazilian real have strengthened more than 10 per cent against the dollar. “Local markets are far outperforming external debt,” said Paul Greer, emerging markets debt portfolio manager at Fidelity International. “Frankly, I think that trend will probably continue for the rest of the year.”

Take a break from the news

The FT’s six films to watch this week include Ari Aster’s Beau Is Afraid starring Joaquin Phoenix (above), the Nam June Paik profile Moon Is the Oldest TV and Kelly Fremon Craig’s adaptation of the Judy Blume novel Are You There God? It’s Me, Margaret.

Additional contributions by Gary Jones and Gordon Smith