Amidst the rhetoric surrounding the “free market,” countries often resort to policy measures as strategic maneuvers, setting the stage for economic skirmishes rather than military conflicts. In response to heightened chip import restrictions imposed by the US, China has opted for a tactical trade restriction, banning government purchases of Intel, AMD, and Microsoft products.
Under the guise of prioritizing “safe and reliable” hardware and software, China’s CCP’s Information Technology Security Evaluation Center has formulated a comprehensive list of approved vendors for government procurements. Conspicuously absent from this list are industry titans Intel and AMD, as well as Microsoft, the architect behind the dominant operating system—all of which are US-based corporations.
Chinese counterparts, including Huawei, have secured spots on the list of approved vendors, indicative of a deliberate shift towards domestic alternatives. While the guidelines were initially unveiled in December of the preceding year, they have only recently been rigorously enforced as official policy, affecting government agencies above the township level, while exempting consumers and corporations.
While Microsoft is expected to weather the storm relatively unscathed, the procurement ban poses a significant challenge for both AMD and Intel, given China’s status as a key market contributor. However, this move aligns with broader geopolitical trends, reflecting the ongoing power struggle between major global players.
Meanwhile, the US has pursued a proactive approach in mitigating Chinese competition within the burgeoning American AI market, implementing bans on chip sales to China—including certain consumer-grade alternatives like high-performance graphics cards. Concurrently, efforts to bolster domestic chip production, such as the CHIPS Act, aim to reduce reliance on overseas manufacturing hubs like Taiwan.
The unveiling of China’s procurement ban has sent ripples across global markets, resulting in slight declines in the stock prices of industry behemoths such as Intel, AMD, and Nvidia.