This week, Chinese officials at the country’s Ministry of Industry and Telecom have ordered the country’s largest telecommunications companies to remove Intel and AMD chips from their networks.

US-Sino Tech War heated up again this week. China’s largest technology agency has given China Mobile, China Unicom, and China Telecom until 2027 to remove products containing Intel and AMD chips from their networks. This includes routers, switches, and other network equipment that could be used to switch phone calls, wireless, and Internet traffic.

The ministry has ordered telecom companies to inventory devices with foreign chips and semiconductors. Then, provide a timeline when those devices will be removed from their networks and replaced with domestic devices.

This Was Bound to Happen

The tech fight with China began during the Trump administration when allegations against Huawei were made by the US and Canada. Huawei devices were banned by the North American countries and subsequently their European allies. The Biden administration continued by banning the most powerful CPUs and AI-enabling graphics processors from being sold to Chinese agencies and companies. The US also started a local grown effort to fabricate processors by injecting billions of dollars into Intel and AMD, and having Taiwanese Semiconductor building new facilities in Texas.

After these moves, China began pumping billions of dollars into local processor and semiconductor fabrication facilities to bring themselves up to speed. They’ve done it in record time. Chinese semiconductors have made their way in computers and mobile devices en masse.

The idea was to inflict technological pain on China, but it appears to be backfiring. The Chinese economy is less market driven than the American economy. Many purchasing moves can be directly driven by the government and not by industry. By forgetting this, the US may hurt the world’s two largest semiconductor manufacturers, US-based Intel and AMD.

27% of Intel’s revenues come from Chinese firms. 15% of AMD’s revenue is derived from Chinese purchases.

It’s been interesting watching this play out. It’s also hard not to think about how China was able to ramp up so quickly. China has been known to be a large commercial espionage player.

Last year, the US imposed tough restrictions to limit the sale of Nvidia’s most advanced GPUs. I wonder how long we’ll see new and advanced AI chips coming out of China.