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This comes amid growing trade tensions between the US and China as demand for advanced chips continues to grow alongside the race to build the most powerful AI systems.
Chinese officials reportedly asked telecom giants in the country to phase out the use of foreign chips earlier this year, which would impact US chip giants Intel and Advanced Micro Devices (AMD).
China’s Ministry of Industry and Information Technology gave the telecom companies a deadline of 2027, according to a Wall Street Journal report, to phase out foreign chips that are core to their networks amid rising trade tensions between the US and China.
Intel and AMD, two of the largest chipmakers in the US, will likely be hit hard by this move, as China is a key market for both. Their shares have dipped since the news was first reported today (12 April).
Less than a week ago, the US and EU decided to extend existing agreements for three years to probe semiconductor subsidies and potential supply chain disruptions amid concern around China’s market dominance in legacy chips – which power everyday technologies from washing machines to cars.
In a joint statement published on 5 April, the US and EU said they share “concerns” about non-market economic policies and practices that may lead to “distortionary effects” or “excessive dependencies” for legacy chips.
The US recently launched an industry survey to assess the use of legacy chips in supply chains that directly or indirectly support its national security and critical infrastructure. The EU also said it is gathering information on the issue.
In the more advanced semiconductor space, the US and China have been locking horns in a chip war for quite some time. Demand for advanced and powerful chips has soared in recent months as tech giants across the world race to make the most of AI technologies.
Last October, for instance, the US issued a fresh batch of restrictions on the export of AI chips, a follow-up to the restrictions on advanced chip exports that were introduced in 2022 to China and multiple other countries.
It said at the time that the restrictions aim to prevent advanced hardware from being deployed for military use in certain countries, such as Russia and China. Earlier in the year, the Netherlands joined this trade war and imposed export controls to restrict technologies from Veldhoven-based ASML.
China hit back against the sanctions when it announced export restrictions on gallium and germanium, two metals that are considered vital to the semiconductor sector.
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