China directs state-owned telecom carriers to replace foreign chips
China's Ministry of Industry and Information Technology has reportedly issued a directive to state-owned mobile operators, instructing them to gradually replace foreign semiconductors. This mandate includes the country's two largest carriers, China Mobile and China Telecom. The regulatory body has asked these carriers, along with all other state-owned operators, to examine their networks for any non-domestically produced semiconductors, and create a plan for their replacement.
Local semiconductor quality fuels policy change
The shift toward domestically produced chips has become feasible due to significant enhancements in their quality and performance in recent years, as reported by The Wall Street Journal. Chinese firms like Huawei have been compelled to develop their own semiconductors due to trade restrictions. This move is aimed at achieving self-reliance and preparing for potential difficulties in buying chips from the US and its allies.
China bolsters domestic semiconductor industry with funding
The Chinese government is supporting these initiatives by accumulating $40 billion in funds to aid the domestic semiconductor industry. This move is a continuation of Intel and AMD's previous prohibitions on Intel and AMD chipsets in government computers. Earlier, China had also banned the use of US-made technology across all government bodies and public bodies. It also prevented local companies from purchasing chips made by US firm Micron Technology.
Intel and AMD to be badly affected
Intel and AMD are expected to bear the brunt of China's latest step. The duo provides most of the chips used worldwide for mobile networks. To note, China was Intel's biggest market last year and accounted for 27% of its revenue. Now, they will not only lose some of their biggest buyers but also face heavy competition from Chinese chipmakers.
