The Chinese government has reportedly ordered top telecommunications operators in the country to phase out foreign chips from their networks by 2027.
This move is believed to hit US chip manufacturers, Intel and AMD, significantly. According to a Wall Street Journal (WSJ) report, Chinese operators accounted for over 27% of Intel's overall revenue in 2023 and 15% of AMD's revenue.
Eliminating Foreign Chips
The Ministry of Industry and Information Technology has reportedly directed state-owned telecom providers to inspect their networks for non-Chinese semiconductors and set deadlines for their replacement.
The WSJ report also said that Chinese operators have been progressively transitioning to domestic alternatives due to the significant enhancement in the quality of Chinese-manufactured chips, which have shown improved stability and performance.
Meanwhile, Washington's imposition of stricter regulations on high-tech exports to China has increased trade tensions between the two countries, according to a Reuters report last year. This move exacerbates trade tensions between the two countries, which have already been strained due to various economic and geopolitical factors.
The imposition of stricter regulations on high-tech exports by Washington reflects ongoing concerns about intellectual property theft, national security risks, and unfair trade practices by China. In response, China's decision to transition away from US chips in its networks can be seen as a strategic maneuver to reduce dependence on American technology and assert its technological independence.
Furthermore, the shift towards domestically manufactured chips by Chinese operators could have implications for global supply chains and the semiconductor industry. As China continues to invest heavily in its semiconductor sector and improve the quality of domestically produced chips, it may challenge the dominance of US semiconductor companies and disrupt established supply chains.
In 2022, state-owned enterprises were similarly instructed to switch to domestic office software systems by 2027—the first time that such explicit deadlines have been imposed. Additionally, Chinese authorities previously issued directives to gradually eliminate US chips manufactured by Intel and AMD from government personal computers and servers.
