• Chinese cybersecurity group calls for review of Intel CPUs, citing security.
• Move is seen as potential retaliation against US chip controls
• China is willing to leverage market access as a countermeasure.

The intensifying technological rivalry between the US and China has entered a new phase, with a prominent Chinese cybersecurity organisation launching a security probe into Intel products. The development comes amid tightening US restrictions on semiconductor exports to China and growing competition for AI supremacy.

The Cyber Security Association of China (CSAC) announced via WeChat on October 16 that it would examine Intel’s central processing units (CPUs) sold in mainland China, citing concerns over “frequent vulnerabilities and high failure rates.” The Association highlighted historical security vulnerabilities in Intel chips and reported instances of specific processor series causing videogame crashes.

The following day, Intel’s China division responded swiftly, stating through its official WeChat account that it “strictly abides by the laws and regulations of the country,” and that it has consistently prioritised product safety and quality. The company expressed its willingness to “maintain communications with the relevant authorities,” and address any concerns regarding product safety.

In retrospect, the security review follows a series of US measures to restrict China’s access to advanced semiconductor technology, including the October 2022 export controls on high-end chips and chip-making equipment, and the subsequent expansion of those measures in 2023. The timing and nature of the review suggest it could be part of China’s broader strategy to counter US technology restrictions.

The move appears particularly significant as Intel holds substantial business interests in China, which remains one of the world’s largest semiconductor markets. According to industry analysts, the review could signal China’s willingness to leverage its market access as a countermeasure against US trade restrictions.

The scrutiny of Intel comes as Chinese domestic CPU manufacturers such as Loongson, Zhaoxin, and Hygon having made significant strides in recent years. The companies have captured over 50% market share in state-owned agencies and public procurement markets, suggesting China’s growing capability to reduce dependence on foreign processors.

The stakes are particularly high for Intel, which derived 27.4% of its revenue from China in 2023. The substantial market exposure comes at a challenging time for the company, which has recently faced declining earnings and implemented a series of job cuts. The situation is further complicated by US export controls that prevent Intel from selling its most advanced products to Chinese clients, with some customers banned entirely from receiving Intel shipments.

However, CSAC’s criticism extends beyond security concerns. The association noted Intel’s position as a significant beneficiary of the Biden administration’s CHIPS and Science Act, which it characterised as unfairly discriminating against China’s semiconductor industry. The group also criticised Intel’s supplier policies prohibiting the use of products and labour from China’s Xinjiang region – a requirement aligned with US law but contested by Chinese authorities. The timing and nature of this security review follow a familiar pattern. 

In 2023, China employed similar tactics against Micron Technology, leading to significant market disruption. After a cybersecurity investigation by the Cyberspace Administration of China concluded that Micron’s products posed “network security issues,” Chinese authorities banned companies in critical infrastructure sectors from purchasing Micron products. 

The impact was substantial, with Micron facing multi-billion dollar market consequences. China has already begun reducing its dependence on foreign semiconductors, reportedly directing major state-owned telecommunications carriers to phase out chips from Western manufacturers like Intel.  In the broader context, the review appears to be part of what some industry observers call China’s “Python Strategy” – a methodical approach to gradually tightening restrictions on foreign companies while promoting domestic alternatives. 

Its strategy has already been witnessed in action by other US technology companies, most notably Micron Technology, which faced a cybersecurity review in 2023 that restricted its products’ use in critical information infrastructure. This further reflects the complex interdependencies in the global semiconductor supply chain. 

While China remains a crucial market for US semiconductor companies, the Chinese government has been actively investing in its domestic semiconductor industry through initiatives like the “Made in China 2025” plan, which aims to reduce reliance on foreign technology.

Therefore, Intel’s experience might be a cautionary tale for other US technology companies operating in China. The security review marks a significant escalation in the ongoing technology conflict between the world’s two largest economies. It suggests that as US-China relations continue to evolve, technology companies may increasingly find themselves navigating complex political and regulatory challenges in addition to those of a technical and commercial nature.

This development could accelerate several trends: China’s push for technological self-reliance, the reconfiguration of global supply chains, and the increasing bifurcation of the worldwide technology ecosystem into US and Chinese spheres of influence.