Intel And AMD Excluded From Government Agencies China To Phase Out US Semiconductors

The Financial Times (FT) reported on the 24th that China has introduced guidelines to phase out American microprocessors such as Intel and AMD from personal computers (PCs) and servers used by its government agencies. It is interpreted that China is also taking countermeasures as the United States blocks access to China’s cutting-edge semiconductors and production equipment for national security reasons.

The FT reported that China’s Ministry of Industry and Information Technology released new guidelines for government computer and server procurement on December 26 last year, and government agencies have been complying with them since this year. The FT added that this guideline recommends that computers for government agencies use Chinese products instead of foreign operating systems (OS) and database software, such as Microsoft (MS) Windows.

The detailed guidelines stipulate that government agencies and Chinese Communist Party organizations at the township level or higher must purchase ‘secure and reliable’ processing devices and operating systems. Multiple officials told the FT that “state-owned enterprises have been instructed by the supervisory body, the State-owned Assets Supervision and Administration Commission, to complete the technology transition to domestic suppliers by 2027.”

The list of 18 ‘safe and reliable’ processors and OSs released by the China Information Technology Security Evaluation Center (CNITSEC) in December last year showed that they were all made in China. It is reported that among these are Huawei, China’s largest telecommunications equipment company, and Feiteng, a Chinese central processing unit (CPU) design company, which are under US sanctions. The Chinese government’s guidelines are part of the national strategy for technological self-sufficiency in the military, government, and state-owned institutions.

Jesang Securities estimated that the financial resources needed to replace the information technology (IT) infrastructure of the government, party agencies, and eight major industries will reach 660 billion yuan (about 122 trillion won) by 2027. On the other hand, a blow to Intel and AMD is inevitable. Intel earned 27% of its $54 billion in sales last year from China, and during the same period, AMD also recorded 15% of its $23 billion in sales from China.

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