In a significant move, China has announced new guidelines to phase out US microprocessors from Intel Corp. (NASDAQ: INTC) and Advanced Micro Devices, Inc. (NASDAQ: AMD) in government PCs and servers, opting instead for domestic technology.
What Happened: The new procurement rules are part of China's broader strategy to replace foreign technology with homegrown solutions. The guidelines also aim to replace Microsoft's (NASDAQ: MSFT) Windows operating system and foreign-made database software with domestic alternatives, reported the Financial Times.
The new rules, introduced by the Finance Ministry and the Ministry of Industry and Information Technology (MIIT) on December 26, mark China's most significant step yet to build up domestic substitutes for foreign technology. This move mirrors similar efforts in the US amidst escalating tensions between the two countries.
Government agencies and party organs above the township level are now required to include criteria for "safe and reliable" processors and operating systems in their purchases. The state testing agency, China Information Technology Security Evaluation Center, has published its first list of approved processors and operating systems, all from Chinese companies.
The shift away from foreign hardware is expected to impact US companies, particularly Intel and AMD, which have significant market shares in China. The transition to domestic providers is expected to be completed by 2027.
Microsoft and Intel declined to comment on the matter, while AMD did not respond to a request for comment.
Why It Matters: This move is not entirely unexpected. As reported by Benzinga in May 2022, China had asked its central government agencies and state-backed corporations to replace all foreign PC hardware and operating systems with domestic alternatives within two years.
This aggressive push is part of Beijing's decade-long campaign to replace imported technology with local alternatives due to rising privacy concerns.