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Beijing is working to become self-reliant in chip manufacturing, rolling out new guidelines that will phase out the use of microprocessors from U.S. companies Intel and Advanced Micro Devices in government computers and servers. Financial Times. The move is part of a broader movement to replace foreign technology with domestic technology as tensions rise between China and the United States. Even Microsoft Windows and foreign repositories are subject to the new guidelines.
China’s Ministry of Finance and Ministry of Industry and Information Technology (MIIT) announced stricter procurement rules in December 2022, requiring government agencies and party organs to prioritize “safe and reliable” microprocessors and operating systems from Chinese companies when purchasing. At the same time, the China Information Technology Security Assessment Center announced the first list of approved “safe and reliable” processors and operating systems, all from domestic companies such as Huawei and Phytium, both of which are included in the U.S. export blacklist.
This procurement reform is part of the national strategy of “New Innovation” or “Innovation in Information Technology Applications”, which aims to achieve technological self-sufficiency in the military, government and state departments. State-owned enterprises are instructed to complete their transformation into domestic technology providers by 2027.
Impact on U.S. chip manufacturing companies
U.S. tech giants such as Microsoft, Intel and AMD will feel the heat of the Chinese government directive because they have huge market shares in the country.according to British “Financial Times” reportIt is estimated that 27% of Intel’s $54 billion in sales and 15% of AMD’s $23 billion in sales in 2022 will come from China. Microsoft President Brad Smith told the U.S. Congress last year that China contributed 1.5% of the company’s revenue. at the same time, Reuters reports Revealed how the United States will increase U.S. semiconductor production by reducing the use of Chinese and Taiwanese microprocessors under the 2022 Chip and Science Act passed by the Biden administration. The bill subsidizes domestic production of advanced chips. In early 2020, U.S. government blocks Huawei from purchasing chips and semiconductors The United States has added all Huawei affiliates to the entity list.
According to new guidelines set by the Chinese government, companies must submit complete R&D documents and codes for their products to be included on the approved list. The main criteria for approval are based on the level of design, development and production completed in China.
While there is still some leeway for limited purchases of Intel- and AMD-powered computers, procurement officials stressed the need for additional steps to register and account for such purchases. China’s government procurement office said it can purchase U.S. chips as long as it “complies with relevant management procedures.”
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