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China Asks Telecom Carriers to Drop Foreign Chips, WSJ Says

In Technology
April 12, 2024

(Bloomberg) — Beijing has ordered telecom carriers like China Mobile Ltd. to replace foreign chips in their core networks by 2027, the Wall Street Journal reported, citing people familiar with the matter.

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The Ministry of Industry and Information Technology issued the directive earlier this year, the Journal reported, dealing a potential blow to US chipmakers Intel Corp. and Advanced Micro Devices Inc. Their shares were down 3% and almost 4%, respectively, in New York on Friday morning.

The industry overseer ordered its three biggest state-owned mobile operators, which include China Unicom and China Telecom Corp., to inspect their networks and come up with timelines to replace non-Chinese processors, the newspaper said. Representatives for the three operators didn’t immediately respond to requests for comment.

Beijing is accelerating a campaign to eradicate American technology, in part to circumvent a growing thicket of US sanctions. The government has directed state-backed institutions and corporations to drop iPhones, pushed firms to abandon foreign computers and asked its electric-vehicle makers to stick with locally designed silicon.

Read More: China Urges EV Makers to Buy Local Chips as US Clash Deepens

The broad, coordinated effort quickened in 2023 with the rise of national champions such as Huawei Technologies Co., which raised the prospect of local alternatives throughout the tech supply chain. The telecom directive echoes moves by Western governments to bar the use of Huawei networking gear, which they deem a threat to national security.

China’s three state carriers are among the biggest cloud and data center providers in the country, using chips from American suppliers.

–With assistance from Gao Yuan.

(Updates shares in second paragraph.)

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