On Friday, China’s cyberspace regulator (CAC) announced it would conduct an audit of US memory chip maker Micron, whose products are sold in China, The Wall Street Journal reported.

The regulator claims that this move is designed to ensure security in the supply chain of important elements of the information infrastructure, prevent potential risks and protect national security. The inspection comes amid worsening relations between China and the United States, which could raise concerns among international companies operating in China that they might be among those being inspected.

Matthew Bryson, an analyst at Wedbush Securities, said the action against Micron could signal a more global shift in Chinese policy towards other US suppliers, which could now face similar action.

In 2022, China accounted for about 11% of Micron’s annual sales, or $3.3 billion. In its annual report, the company reported increased competition in China as the government and state-owned companies increase investment in the domestic semiconductor industry. Micron noted that the Chinese government may limit their participation in the local market or make it difficult to compete with Chinese firms.

Beijing has been actively attracting foreign investment, seeking to stimulate the economy after slowing growth due to restrictions related to COVID-19. However, the PRC authorities continue to put pressure on transnational corporations.

Authorities raided the Beijing office of US law firm Mintz Group and arrested five of its employees. Authorities previously suspended Deloitte’s Beijing office for three months and imposed a $31 million fine for alleged irregularities in the audit of state-owned China Huarong Asset Management Co.

In recent years, Chinese authorities have required operators of critical information infrastructure to undergo cybersecurity checks when ordering goods and services that may affect national security. However, Beijing argues that this requirement does not involve restrictions or discrimination against foreign companies.

Thus, the product inspection situation of US memory chip maker Micron could be an indicator for other international companies operating in China regarding a possible change in the course of China’s policy towards foreign enterprises. This may lead to a change in business strategies and additional precautionary measures among foreign corporations entering into interaction with the Chinese market.