China Aims to Exclude American Chipmakers from its Telecommunications Sector. An internal review has revealed that state-run mobile operators should switch to domestic semiconductors by 2027, likely affecting Intel and Advanced Micro Devices (AMD). This move is part of Beijing’s efforts to end the use of foreign core technology in its telecommunications infrastructure. The Chinese Ministry of Industry and Information Technology has instructed mobile operators to audit their networks for non-Chinese semiconductors and to create plans for their replacement.

The Quality and Stability of Chinese Chips Have Improved, Enabling the Switch to Domestic Alternatives. This Development Could Severely Affect Intel and AMD, Who Have Been Supplying the Majority of the Core Processors in China's Network Equipment. Both China Mobile and China Telecom Are Major Customers of These Chip Manufacturers and Purchase Thousands of Servers for Their Data Centers.

China's Localization Policy Could Significantly Reduce Intel and AMD Sales in the Country, One of the Most Important Markets for Semiconductor Companies. China is Intel's Largest Market, Accounting for 27% of the Company's Revenue Last Year. AMD Reported That China Contributed 15% of Its Revenue Last Year, a Decline Compared to the Previous Year Following Restrictions Imposed by US Authorities.

The geopolitical tension between the USA and China and Beijing's localization efforts increase competitive risks for Intel and AMD. Chinese CPU alternatives such as Huawei's Kunpeng processors are gaining ground and pose an increasing competition for American chips.