Danish Kapoor
Danish Kapoor

China to complete domestic chip transition by 2027

China's aim to make a breakthrough in the technology arena carries the country into a new strategic era. A new news for the country's telecom operators was brought to the agenda by the instructions of the Ministry of National Industry and Information Technology of China. According to the Wall Street Journal, the Chinese government has demanded that telecom providers phase out foreign-made chips, especially those produced by companies such as Intel and AMD, by 2027.

This advance is reminiscent of the US government's efforts to dismantle cellular equipment produced by Huawei, primarily due to security concerns. In addition, the USA, considering its own security concerns, demanded that Nvidia and AMD be prevented from exporting their most powerful artificial intelligence chips to China and that other countries reduce chip shipments to China.

The roots of this political change plan of China are seen as part of its strategy to reduce its external dependence on chip technology and turn to its own developed technologies. Last year, Huawei launched its first phone featuring its own 5G chip manufactured by China's SMIC. Still, some concerns remain about whether China's homegrown chips can perform as effectively as chips produced by giants like Nvidia, Intel and AMD.

Although they promise to reduce the Chinese telecom industry's dependence on foreign manufacturers and strengthen domestic chip production, implementing this strategy could mean a serious loss of revenue for global chip manufacturers in the process. As noted by the Wall Street Journal, Intel generated 27 percent of its revenue from the Chinese market in 2023, while AMD generated 15 percent of its sales from China last year.

This situation may reshape the balances in the chip market, which has an important place in the global economy. For companies like Intel and AMD, this may mean accelerating their search for new markets and product diversification strategies. The long-term effects of China's transition to domestic production strategy on the global technology race have already become a matter of curiosity. Experts state that this change of direction and investments give important clues about the future of both China and the world market.

Danish Kapoor