Micron (NASDAQ:MU) stock is sinking 4% in early trading. The decline comes after China’s government prohibited some of the country’s companies from buying Micron’s offerings.

Micron specializes in producing and marketing “memory chips used in phones, computers and other electronics,” The New York Times noted.

More About Beijing’s Decision

China will prevent firms that handle important data from buying MU’s chips. China’s government blamed the decision on cybersecurity concerns, saying that Micron’s products are not sufficiently secure.

But China’s move is likely retaliation for Washington’s decision, made last year, to prevent U.S. chipmakers from selling some of their higher-end products to Chinese companies.

Additionally, Beijing has long sought to boost China’s chipmakers. By prohibiting some Chinese companies from buying Micron’s chips, China’s government is likely to boost the financial results of some competing Chinese chipmakers. As a result, those firms will be able to plow more funds into R&D, enabling them to improve their offerings down the road.

For its part, Micron said that it was evaluating Beijing’s move, seeking to comprehend the “details” of the decision,  and contemplating what steps to take next.

Additional Information About Micron and MU Stock

In statements this morning, Micron noted that it’s “seeing some pockets of price stabilizations” and “expects pricing declines to moderate in Q4,” The Fly reported.

Third Point, the hedge fund run by well-known investor Daniel Loeb, bought 1.2 million shares of MU stock last quarter, Third Point recently disclosed in a Securities and Exchange Commission (SEC) filing.

Despite today’s decline, MU stock is up 9% in the last month and 30% so far this year.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.