In 2019, the U.S. Federal Communications Commission barred U.S. carriers, which were then starting to roll out their 5G networks, from using subsidies to buy equipment from companies deemed a threat to national security. Chinese manufacturers Huawei and ZTE topped this list. China is now implementing a similar measure, with the Ministry of Industry and Information Technology ordering state-owned mobile operators, including the country’s two largest carriers, to phase out the use of foreign chips, according to the Wall Street Journal.
The regulator has reportedly ordered China Mobile and China Telecom, as well as all other state-owned operators, to check their networks for semiconductors that were not produced locally. He then asked them to determine the timing of their replacement. Sources told the magazine that there is now an opportunity to switch to domestic chips thanks to improvements in their quality and performance over the past few years. Chinese companies such as Huawei have been forced to develop their semiconductors after being hit by trade sanctions to be self-sufficient in case they can no longer import chips from the US and its allies. The Chinese government, in turn, supports their efforts and is raising $40 billion to help the domestic semiconductor industry.
This latest move by China follows a ban on the use of Intel and AMD processors in government computers. Before that, China also banned the use of American-made technology in all government institutions and public organizations and banned local firms from buying chips made by the American memory manufacturer Micron Technology. Intel and AMD are likely to suffer significant losses from this innovation, as they produce most of the chips used in mobile networks around the world. China was also Intel’s largest market in 2023, accounting for 27% of its revenues. In addition to losing some of its biggest customers, the companies will now face competition from Chinese manufacturers.
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