China bans use of Intel and AMD in government computers

China has issued new guidelines which will see US microprocessors such as Intel and AMD phased out from government computers and servers. Beijing is ramping up its campaign to replace foreign technologies with domestic solutions.

In addition, the stricter government guidelines on procurement seek to eliminate Microsoft Windows operating system as well as foreign database software. Parallel to this, a localisation campaign is underway in state-owned companies.

China’s latest buying rules are the most significant yet in China’s efforts to develop domestic alternatives for foreign technology. They also echo US moves as tensions between the US and China increase. Washington has placed sanctions on an increasing number of Chinese firms on the basis of national security, passed legislation to encourage more technology to be produced within the US, and banned exports to China of advanced chips and other tools.

The new guidelines for PCs, laptops and servers were announced on December 26 by the Ministry of Industry and Information Technology and the Finance Ministry. They received little attention. The guidelines require government agencies, party organs and other organizations above township levels to use criteria that include “safe and reliable”, processors and operating system requirements when purchasing.

China Information Technology Security Evaluation Center published on the same date in December its first list “safe and reliable”, processors and operating system, all of which were from Chinese companies.

Phytium and Huawei were among the 18 processors approved. Both are listed on Washington’s Export Blacklist. Chinese processor manufacturers use a mix of chip architectures, including Intel’s x86 and Arm, as well as their own. Operating systems are derived mainly from Linux software.

Beijing’s new procurement strategy is part of the national strategy to achieve technological autarky across military, government, and state sectors. This has been dubbed xinchuang (or “IT application innovation”).

According to a local government official in charge of IT system replacement, the standards are “the first detailed and clear nationwide instructions for the promotion xinchuang”.

According to two sources briefed about the issue, State-owned Enterprises were also told to transition their technology to domestic providers before 2027 by the State-owned Assets Supervision and Administration Commission. State groups began reporting quarterly on their progress with revamping their IT system last year. However, some foreign technology will be allowed to stay, according to the people.

It is the state-led move away from foreign hardware that will hurt US companies in China. This starts with Intel and AMD, two of the largest PC processor manufacturers. Intel’s biggest market was China last year. It accounted for 27 percent of its $54bn sales, and 15 percent of AMD’s sales of $23bn. Microsoft does not separate out China sales, but Brad Smith told the US Congress last year that China accounted for 1.5 percent of revenue.

Microsoft and Intel declined comment. AMD has not responded to our request for comment.

Intel and AMD may never make it to the list of approved processors. Companies must submit the complete R&D documentation, including code and design documents for their products to be evaluated. According to an announcement from the state testing agency, the top criterion for evaluation is how much design, development, and production was completed in China.

In the last few months, province and city finance ministries have sent out dozens notices about this new guideline, in an effort to ensure compliance by thousands of buyers. According to two procurement officials, there is still some flexibility to purchase computers with Microsoft Windows and foreign processors.

One official, who is based in Shenzhen said that they needed to take a further step to explain and register purchases of foreign processors. This month, the central government’s purchasing office said that limited purchases of Intel and AMD powered computers could be continued as long as departments “complied with relevant management procedures”.

Lao Zhangcheng said that his colleagues, who were in charge of buying 16 computers with operating systems native to China for an organization under the Shaoxing City Transport Bureau, had no other choice than to become familiarized with domestic operating systems.

Lao explained, “We’re replacing old computers with foreign chips.” After this purchase, everyone in the office is going to have a home computer. We can still use the old Windows computers in certain circumstances.

Lin Qingyuan is a leading chip expert with the research group Bernstein. He said that server processors would be replaced faster than PCs due to the smaller software ecosystem. He predicted that xinchuang server shipments would account for 23 percent of the total China server shipment in 2026.

He added that “the purchasing guidelines have made the xinchuang more actionable” for officials.

Analysts at Zheshang Securities estimate that the country will require 660bn (91bn USD) between 2023 and 2027 in order to replace the IT Infrastructure of the government, party organs, and eight major industry sectors.

Requests for comments from the MIIT, China IT Security Evaluation Center and China Finance Ministry were not answered.