China has launched a security review of Intel processors through its cybersecurity regulator, marking the latest escalation in the ongoing technology standoff between Beijing and Washington. The Cyber ​​Security Association of China (CSAC) announced On October 16, the company announced it was investigating Intel CPUs sold in mainland China, citing “common vulnerabilities and high failure rates.”

Intel’s China division responded quickly a day later, reaffirming its commitment to “strictly complying with the country’s laws and regulations” while emphasizing its focus on Product safety and quality.

Market Impact and Timing

For Intel, which generated 27.4% of its revenue in China in 2023, the stakes couldn’t be higher. This significant market exposure comes at a particularly difficult time for the company, which has recently weathered declining profits and implemented workforce reductions. Complicating the situation are U.S. export controls that have already prevented Intel from selling its most advanced products to Chinese customers.

The timing and nature of this security review follows a pattern established in China’s previous actions against U.S. technology companies. In 2023, China used similar tactics against Micron Technology, causing significant market disruption. After a cybersecurity investigation concluded that Micron’s products posed “network security issues,” Chinese authorities banned companies in critical infrastructure sectors from purchasing Micron products, resulting in billions of dollars in market impact.

The larger context

CSAC’s criticism goes beyond safety concerns. The association highlighted Intel’s position as a significant beneficiary of the Biden administration’s CHIPS and Science Act, which it said unfairly discriminates against the Chinese semiconductor industry. The group also took issue with Intel’s supplier policies that ban the use of products and labor from China’s Xinjiang region – a requirement consistent with U.S. law but challenged by Chinese authorities.

The review comes as domestic Chinese CPU manufacturers such as Loongson, Zhaoxin and Hygon have made significant progress. The companies have reportedly captured over 50% of market share in state agencies and public procurement markets, suggesting that China is increasingly able to reduce dependence on foreign processors.

China has already begun this transition, reportedly ordering major state-owned telecom providers to phase out foreign semiconductors. The drive for self-reliance and the regulatory pressure placed on foreign companies suggest a coordinated strategy to respond to U.S. technology restrictions while advancing domestic alternatives.

Impact on the industry

The development could accelerate several trends: China’s pursuit of technological self-reliance, the reconfiguration of global supply chains and the increasing division of the global technology ecosystem into the spheres of influence of the US and China.

For Intel and other U.S. technology companies, the developments underscore the delicate balance between complying with U.S. export controls and maintaining access to the important Chinese market. As tensions continue to ease, the tech sector appears to remain at the forefront of strategic competition between the US and China.

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Tags: Intel