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The Chinese government has said it will phase out Intel and AMD microprocessors from government computers, replacing them with domestically developed alternatives
In recent years, geopolitical tensions between China and the US have seen both nations try to disentangle themselves from the global supply chain, instead seeking to bolster their domestic production capabilities.
Nowhere has this trend been more on show than the semiconductor industry, which has seen both government’s provide enormous subsidies to local companies in an effort to avoid the impact of bilateral sanctions.
In 2022, the Biden Administration signed the CHIPS and Science Act into law, earmarking $52.7 billion to be used for subsidies over five years to help develop the nation’s chip manufacturing capabilities and R&D. Since then, numerous chip companies have announced they will be opening fabrication plans in the US, most notably Intel and Taiwan Semiconductor Manufacturing Company (TSMC).
In China, meanwhile, reports suggest that the government is preparing to provide over 1 trillion yuan (around $145 billion) in subsidies to the sector over the next five years.
Now, with sanctions showing little signs of abating and domestic chip capabilities expanding, China is preparing to take the next step on its quest for self-sufficiency, announcing that government computers will no longer make use of US technology.
The new governmental guidelines were first unveiled in December last year, ordering government agencies to only use equipment from companies deemed ‘safe and reliable’ by the China Information Technology Security Evaluation Center (CITSEC).
The list of companies currently approved for use by the CITSEC includes exclusively Chinese firms.
The deadline to transition to domestic equipment is 2027, according to sources speaking to the Financial Times.
These new guidelines are expected to hit US companies like Intel and AMD heavily, both of which have a major market share in China. Last year, Chinese business represented 27% of Intel’s $54 billion revenue and 15% of AMD’s $23 billion in sales.
While these companies will likely aim to be whitelisted by the CITSEC, doing so will require the submission of sensitive R&D documentation that the tech firms will be loath to reveal.
On the other hand, refitting all the Chinese governmental hardware with domestic equipment will be an expensive and time-consuming task. In addition, questions remain around the domestic equipment’s maturity; while China’s domestic chip technology has improved dramatically in recent years, it is doubtful it can perform to the same level as existing US counterparts – at least, not yet.
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