The order has dealt a blow to U.S. semiconductor firms Intel and AMD
According to reports from The Wall Street Journal, China’s Ministry of Industry and Information Technology have told Chinese telecom operators that they must remove foreign chips from their networks by 2027.
The GSMA’s Mobile Economy China 2024 predicted that mobile data traffic in China will quadruple by the end of the decade and that by the end of this year, the county will surpass 1 billion 5G connections, making it a world leader in this space. Chinese telcos must now balance this anticipated network expansion with the new rip and replace timeline established by the government.
The directive has not only put serious pressure on the country’s operators, but it has also dealt a blow to U.S. semiconductor firms, particularly Intel and AMD, as the Chinese market makes up 27% and 15% of their total revenues, respectively.
In addition to blocking the use of foreign equipment in telecom networks, the Chinese government also announced last month that it’s forbidding the use of Intel and AMD chips, as well as Microsoft’s operating system, in government computers and servers in favor of local hardware and software.
The U.S. has been banning the use of some of equipment from China’s biggest telecom companies in its domestic networks for years. And in October 2023, the U.S. Department of Commerce escalated tensions by further restricting the sale of U.S.-made, advanced AI chips to China after loopholes in the prior year’s export restrictions were discovered, with substantial impacts on Nvidia’s ability to sell to Huawei — and to a lesser extent Qualcomm — anticipated.
