Daily Newsletter

01 January 1970

Daily Newsletter

01 January 1970

China bars Intel and AMD chips in government computers

Beijing plans to phase out US made microprocessors in government PCs and servers, as well as foreign-made software by 2027.

Sarah Brady March 25 2024

China has introduced guidelines aimed at removing US microprocessing chips in government PCs and servers, as well as sidelining Microsoft‘s Windows operating system and foreign-made database software in favour of domestic alternatives.
 
The procurement guidelines mandate government agencies above the township level to prioritise “safe and reliable” processors and operating systems from Chinese companies, the FT first reported.

China’s industry ministry issued lists of chips, operating systems, and centralised databases deemed “safe and reliable” for three years, all sourced from Chinese companies.

The move aligns with China’s broader strategy of technological self-reliance, termed xinchuang or “IT application innovation,” particularly in the military, government, and state sectors.

State-owned enterprises are directed to transition to domestic technology providers by 2027, with quarterly reporting on progress. Some foreign technology may be permitted, but the emphasis is on domestic solutions.

The procurement guidelines pose a challenge to US companies like Intel, AMD, and Microsoft, potentially impacting their market presence in China.

Compliance with the new guidelines is being enforced at provincial and city levels, with some flexibility for purchasing computers with foreign processors and Microsoft Windows, albeit with additional registration and explanation requirements.

Substitution to domestic hardware and software is expected to progress faster in server processors compared to PCs due to a more limited software ecosystem.

Analysts estimate a substantial investment requirement for replacing IT infrastructure in various sectors, highlighting the significant financial implications of China’s domestic technology drive.

In 2022, China consumed around 40% of all chips made globally while being only 12% self-sufficient, according to research firm GlobalData.

The Semiconductor Industry Association and Boston Consulting Group predicted the semiconductor industry will double in size to more than $1trn by 2030, and China will account for approximately 60% of that growth.

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