#43 - Bab el-Mandeb Under Siege, Micron Locks Down the Memory Chip Supply Chain, and China Protects Its Own

Today: Saudi Arabia loses its Red Sea escape route, Micron locks down its memory chip supply chain, and China protects its own supply chains.

Three seemingly distant stories, one common thread: whoever controls the chokepoints - physical, technological, regional, or regulatory - decides Procurement for the years ahead.

Bab el-Mandeb: the blockade is real, Saudi Red Sea exports collapse to zero

On July 20, the Houthis announced a naval embargo against Saudi ships transiting the Bab el-Mandeb Strait, the passage connecting the Red Sea to the Indian Ocean.

The retaliation followed days of military exchanges: Saudi Arabia had bombed the Sana'a airport in Yemen to prevent the landing of a flight carrying Houthi dignitaries returning from the funeral of Ali Khamenei, Iran's Supreme Leader, killed on February 28 in a joint US-Israeli airstrike. The Houthis responded by hitting Saudi Arabia's Abha airport with missiles and drones. Nasruddin Amer, the group's spokesperson, justified the blockade as a response to an “unjust embargo against Yemenis for over 10 years.”

A week later, that threat is already established fact. The Houthis have hit and damaged several Saudi tankers in transit, and Saudi Arabia hasn't loaded a single barrel of crude for export from its west coast through Bab el-Mandeb since the embargo took effect. Some of the traffic has shifted to the (considerably longer) Suez Canal route, where crude flows toward Asia have more than doubled, to 1.06 million barrels per day. Overall, weekly cargo through Bab el-Mandeb has collapsed 36% in two weeks, from a peak of 9.5 million barrels per day recorded in late June.

Oil prices felt the shock, topping $100 a barrel on July 23 for the first time in two months. By July 27, prices had cooled somewhat thanks to a pause in direct hostilities between Iran and the US, but the disruption at Bab el-Mandeb continues regardless of that truce: according to an analysis by Windward reported by Al Jazeera, enforcement of the blockade appears selective, with Chinese-crewed and Chinese-bound ships continuing to transit unhindered, while Western- and Saudi-linked operators are being warned to avoid the route. Meanwhile, traffic through the Strait of Hormuz remains down to a handful of ships a day.

🔗 Sources: Il Post, The National, Bloomberg, Al Jazeera

Micron bets $500 million on a supplier almost nobody's heard of (inside a $3 billion plan)

Micron Technology is one of the leading US technology companies, specializing in memory chips and data storage devices. Founded in 1978 and based in Boise, Idaho, it's today one of the world's leading producers of semiconductors used in AI, smartphones, and data centers.

On July 9, 2026, Micron announced an investment of up to $3 billion to strengthen its US supply chain. The deal includes a $500 million financing package for GlobalWafers, a Taiwanese company that operates the only US plant capable of producing 300mm silicon wafers under the CHIPS for America Program, in Sherman, Texas. The wafer is the physical base of every memory chip: no wafer, no production. The two companies also signed a ten-year supply agreement guaranteeing Micron direct access to the plant's production capacity.

The timing isn't accidental. According to Counterpoint Research, prices for DRAM (computer working memory), NAND (flash memory for data storage, as in SSDs), and HBM (high-speed memory used in AI chips) rose 80-90% between late 2025 and early 2026, driven by AI data centers' memory demand. Micron's quarterly revenue more than quadrupled compared to the same quarter a year earlier, reaching $41.46 billion, and its stock has climbed roughly 700% in twelve months, pushing its market cap past $1 trillion. CEO Sanjay Mehrotra told analysts it will still take time before the memory shortage eases, and that industry supply will only gradually return to normal, not before 2028.

Commenting on the deal was Ben Tessone, Senior Vice President and Chief Procurement Officer at Micron. For Tessone, “securing a reliable supply of critical materials” remains central to the company's long-term growth and technology roadmap. The fact that it was the head of purchasing commenting on the deal says a lot: when even a supplier's supplier becomes a single point of failure, it's Procurement's job to move first.

🔗 Sources: Micron, CNBC, Counterpoint Research

The Greater Bay Area is worth $2.15 trillion. And since June, cutting purchases in China can open an investigation.

The Greater Bay Area is a Chinese economic and territorial development project, linking the special administrative regions of Hong Kong and Macao with 9 cities in Guangdong province, including Guangzhou and Shenzhen.

• 11 cities

• over 88 million people

• about 56,000 km² of area

According to official Hong Kong government data, the area's 2025 GDP exceeded 15 trillion RMB, about $2.15 trillion. At the city level, 2025 confirms Shenzhen as the area's leading economy, with 3.873 trillion RMB and 5.5% growth, the highest among China's four first-tier cities. Guangzhou follows with 3.204 trillion RMB and +4.0%, with Hong Kong in third place.

The area is growing, but very unevenly. Across the Pearl River Delta, 2025 ranges from Shenzhen (+5.5%) to Foshan, practically flat at +0.2%. Guangdong as a whole grew 3.9%, below its own target of roughly 5% and below the national average. Shenzhen is being pulled up by tech, while traditional manufacturing struggles.

The economic figure alone isn't the news. China's 15th Five-Year Plan (2026-2030) calls for guiding the relocation of industrial supply chains “in a rational and orderly manner” and supports Hong Kong in becoming a services hub for high-value-added supply chains.

More relevant for buyers:

• On March 31, 2026, China's first comprehensive regulation on supply chain security (State Council Decree No. 834) took effect,
• followed on April 13 by a second measure against improper foreign “extraterritorial measures” (Decree No. 835).

Together, they introduce risk monitoring, emergency reserves, and, most notably, retaliatory measures against foreign sanctions. According to Al Jazeera, Beijing is reportedly already working on a third rule, still in draft, that would let Chinese prosecutors pursue foreign companies and entities directly. Labor costs and logistics remain important factors, but now an explicitly legal lever has been added: China can use its own supply chains as a tool in a trade dispute.

🔗 Sources: Decree 834 (gov.cn), Decree 835 (gov.cn), MOFCOM Notice No. 24/2026, Ministry of Justice Notice No. 5, Greater Bay Area (Hong Kong Government), Macao News

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