Report: China to Pivot from AMD & Intel CPUs To Domestic Chips in Government PCs

Report: China to Pivot from AMD & Intel CPUs To Domestic Chips in Government PCs

China has begun a policy shift to phase out US processors from government computers and servers. Financial Times. The decision aims to phase out AMD and Intel processors from systems used by Chinese government agencies, which means fewer sales for US-based chipmakers and more sales of China's own CPUs.

New procurement guidelines, introduced quietly at the end of 2023, oblige government agencies to prioritize 'secure and reliable' processors and operating systems in their purchases. The directive is part of a concerted effort to bolster domestic technology and parallels a similar push within government agencies to adopt technology designed in China.

The list of approved processors and operating systems, published by China's Information Technology Security Evaluation Center, includes exclusively Chinese companies. There are 18 approved processors that use a mix of architectures, including x86 and ARM, while the operating systems are based on open source Linux software. Notably, the list includes chips from Huawei and Phytium, both of which are on the US export blacklist.

This shift toward domestic technology is a cornerstone of China's national strategy for technological autonomy in the military, government, and state sectors. The guidelines provide clear and detailed instructions for the use of exclusively Chinese processors, an important step in China's quest for self-reliance in technology.

Government agencies have been directed to complete their migration to domestic CPUs by 2027. Meanwhile, Chinese government agencies must submit quarterly progress reports on their IT system overhauls. Although some foreign technology will still be allowed, there is a clear emphasis on adopting local alternatives.

The move away from foreign hardware is expected to have a measurable impact on US tech companies. China is a big market for AMD (accounting for 15% of last year's sales) and Intel (commanding 27% of Intel's revenue), accounting for a large portion of their sales. Additionally, Microsoft has admitted that China's share of its revenue is very small, without disclosing specific figures. And while government sales are only a fraction of China's overall sales (compared to the larger commercial PC business), the Chinese government is by no means a small customer.

Analysts polled by the Financial Times predict that the migration of home processors will move faster for server processors than for client PCs, because of the less complex software ecosystem that needs to be replaced. They estimate that China will need to invest about $91 billion from 2023 to 2027 to upgrade its IT infrastructure in government and related industries.

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