China’s New Guidelines Impacting U.S. Processors in Government Computers

China has recently introduced new guidelines that will result in the phasing out of U.S. processors in government computers and servers. This move effectively blocks chips from major U.S. companies such as Intel and AMD. Additionally, the guidelines will also have an impact on Microsoft’s Windows operating system and foreign-made database software, as they are being replaced with Chinese alternatives.

The procurement guidelines were unveiled on December 26 and are now being enforced across government agencies higher than the township level. These agencies have been directed to purchase processors and operating systems that are deemed “safe and reliable” by the Chinese government. This decision marks a significant shift in China’s approach towards reducing its reliance on foreign technology, particularly in the semiconductor industry.

Semiconductors play a crucial role in a wide range of devices, from smartphones to medical equipment. However, they have become a focal point in the ongoing technology war between the United States and China. The U.S. has implemented export restrictions aimed at restricting China’s access to key semiconductor equipment and technologies.

Major U.S. chip companies like AMD and Intel have refrained from commenting on the report, indicating the sensitivity of the situation. The U.S. government has introduced rules to limit China’s ability to access or manufacture advanced semiconductor chips, citing concerns about potential military applications.

In response to U.S. restrictions, China has been investing heavily in its domestic semiconductor industry. This has led to an increase in revenue for Chinese chip equipment manufacturing firms. For example, the top 10 equipment makers in China reported a 39% revenue growth in the first half of 2023 compared to the previous year, according to CINNO Research based in Shanghai.

China’s decision to phase out U.S. processors in government computers reflects a broader trend of increasing self-reliance and reducing dependence on foreign technology. The impact of these guidelines extends beyond just hardware and software, as it reflects the escalating technology war between the U.S. and China. As both countries continue to compete in the semiconductor industry, the future of global technology supply chains remains uncertain.

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