Chinese telcos given 2027 deadline to ditch foreign chips

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To reduce dependence on foreign technologies, Chinese officials have reportedly mandated the country’s leading telecom operators – including China Telecom, China Mobile, and China Unicom – to eliminate foreign semiconductors from their networks by 2027.

Beijing’s directive particularly targets chips made by American giants Intel and AMD, which have been a staple in Chinese telecom infrastructure.

Issued by the Ministry of Industry and Information Technology, the directive places enormous pressure not only on the operators but also on the US semiconductor firms. Intel and AMD stood to lose a substantial portion of their revenue, with the Chinese market comprising 27 percent and 15 percent of their total revenues, respectively.

The decision echoes historical tensions between the US and China over telecoms infrastructure security. It harkens back to the moment four years ago when US telecoms regulator FCC banned equipment from Chinese firms Huawei and ZTE over national security concerns. The US feared the equipment could serve as a backdoor for Chinese intelligence operations—a claim Huawei has consistently refuted.

In the UK, Huawei’s equipment must be removed from the country’s 5G networks by 2027. Operators have been banned from purchasing new equipment since 31 December 2020.

China’s plan to transition away from foreign chips poses significant financial and technical challenges for its telecom sector, reminiscent of the financial strains US carriers faced in removing Huawei equipment from their networks. Despite a $1.9 billion support fund, US carriers’ requests for reimbursements totaled more than $5.6 billion.

The directive also aligns with China’s broader ambition to achieve technological self-sufficiency. In response to American trade restrictions that limit China’s access to advanced processing and chipmaking technologies, Beijing has accelerated its push to develop and utilise homegrown semiconductor solutions.

Chinese firms such as Huawei and Semiconductor Manufacturing International Co have made significant advances in developing competitive high-end silicon technologies. Huawei is currently in the process of constructing a research and development facility outside Shanghai, concentrating on developing indigenous chipmaking technologies for various applications.

The 2027 deadline for the removal of foreign semiconductors from telecoms infrastructure represents a critical step in China’s quest for technological independence and challenges the longstanding dominance of Western tech giants.

(Photo by Aron Visuals)

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