Intel’s position in China may be in jeopardy as the country’s Cybersecurity Association, a group with close ties to the government, is calling for a security review of the U.S. tech giant’s products. The group claims Intel’s hardware has consistently posed risks to China’s national interests, urging an official investigation into the company’s activities.
This recommendation, released via a statement on the association’s WeChat channel, signals increasing friction between China and foreign technology providers. While the group itself isn’t a government agency, its connection to China’s regulators suggests the potential for further regulatory action.
This comes at a time when Intel is facing severe problems due to the increasing shift in leading chip architecture towards ARM CPUs and GPU-based processors for AI model training and processing. Qualcomm, which alongside Nvidia has risen as a powerful competitor, is even considering a takeover of Intel after the upcoming US presidential elections.
Security Concerns Trigger New Scrutiny
The latest development happens at a time when China has been tightening its grip on imported technology. The Cybersecurity Association of China (CSAC) has pointed fingers at Intel, stating that its products may be compromising national security. “We suggest initiating a network security review on Intel products to protect the rights of Chinese consumers,” the association mentioned in its post.
Although CSAC lacks direct governmental power, it remains closely aligned with China’s Cyberspace Administration (CSAC), which has previously acted on such recommendations. The CSAC made headlines last year by blocking U.S. chipmaker Micron Technology from selling to major sectors in China after finding that its hardware failed a similar review.
Rocky Relationship Between Superpowers
Tensions in the tech arena between the U.S. and China have escalated sharply in recent years, fueled by waves of export controls and heightened restrictions. In October 2022, the U.S. took a hard stance, slapping heavy limitations on the export of advanced chips and semiconductor production gear to China. Over time, these restrictions have grown tighter, further widening the rift between the two nations.
In one of the more recent moves, the U.S. blocked Chinese firms from accessing high-AI performance memory chips, key components for artificial intelligence applications. The ongoing battle extends far beyond the semiconductor industry and has cast a shadow over several areas, including AI and quantum computing.
Ripples Felt Across Global Tech Industry
As export restrictions pile up, companies on both sides are feeling the pinch. In the U.S., tech giants like LAM Research and Applied Materials have reported losses due to the inability to sell critical components to Chinese manufacturers. This has resulted in a major reshuffling of supply chains worldwide, with many tech firms struggling to adapt to the new landscape.
Meanwhile, Chinese firms have been looking for ways to reduce their dependency on foreign technology. Some companies are developing homegrown alternatives, while others are shifting focus to different markets. Still, the sheer scale of global supply chains makes it difficult for any country to insulate itself from these effects entirely.
New Rules on U.S. Investments in China
The tightening grip on U.S.-China tech trade isn’t limited to exports. In June 2024, the U.S. introduced fresh rules that restrict American investments in several Chinese technology sectors.. These measures, part of a broader push to counter China’s technological rise, are now adding further strain on the global tech ecosystem.
Alongside outbound restrictions, U.S. authorities have also turned their attention to Chinese investments within American companies. Over the past year, there’s been growing scrutiny of deals involving sensitive tech, especially in areas that have potential military applications.
China isn’t sitting idly by. Faced with increasing pressure, Beijing is pouring resources into building up its domestic tech industry. Efforts are underway to reduce reliance on U.S. imports, particularly in areas like semiconductor production, where China has lagged behind. Major government-backed initiatives are in play to accelerate the development of these critical technologies.
China has also struck back with its own set of restrictions, imposing controls on the export of materials needed for semiconductor manufacturing. By cutting off access to rare earth elements, a vital component for chip production, China is hoping to put pressure on foreign industries that depend on these materials.
AI-Related Tensions Deepen U.S.-China Tech Battle
Artificial intelligence has become one of the most fiercely contested sectors between China and the United States. With both superpowers viewing AI as a tool that could dramatically influence military strength, economic growth, and international standing, the stakes in this competition are high.
By 2024, the U.S. holds a lead in generative AI technology, though China is closing the gap, with estimates suggesting the country’s AI advancements trail by anywhere from six months to two years. Despite this, China has surged ahead in patent filings, surpassing the U.S. in AI-related patents since 2021. By 2023, China had more than double the number of patents in machine learning and AI development.
The two nations approach AI development very differently. In the U.S., private companies lead the charge, with tech giants like OpenAI and Google setting the pace. On the other hand, China’s strategy is state-driven, with the government funneling significant resources into AI research, often dictating priorities and goals.
As AI becomes more central to both countries’ future strategies, the U.S. has ramped up export controls to limit China’s access to critical technology. Chief among these are the mentioned restrictions on AI chips, which are crucial for training large machine-learning models. Quantum computing has also come under the microscope, with the new export controls aimed at preventing China from gaining a foothold in cutting-edge technologies.
In a broader effort to curtail China’s tech advancement, the U.S. has brought in allies such as Japan and the Netherlands to implement similar export controls, creating a more unified approach to restricting China’s technological capabilities.
In June 2024, the U.S. took its AI fight to the financial front, proposing rules that would limit or entirely ban American investments in China’s AI sector. For Chinese companies, these restrictions have become a major headache, forcing them to either find new suppliers or speed up efforts to develop AI chips and other tech components locally.
Facing Challenges: Compute Power and Talent
One of the toughest obstacles for China in this AI race is access to high-performance computing resources. U.S. export controls have effectively cut off China’s ability to import advanced AI chips, putting a strain on its ability to train and deploy large-scale AI models. Furthermore, the U.S. still holds an edge when it comes to talent. Silicon Valley and other U.S. tech hubs continue to attract the brightest minds in AI, giving the country an advantage in developing the latest AI technologies.
China’s AI development also faces another hurdle: data quality. With its heavily censored internet, the data available for training AI models may be skewed or limited, making it harder for Chinese developers to create sophisticated AI systems that can compete on a global scale.
Last Updated on November 7, 2024 2:32 pm CET
