China orders government and state enterprises to unload foreign computers

China orders government and state enterprises to unload foreign computers

(Bloomberg) — China has ordered central government agencies and state-backed companies to replace foreign-branded personal computers with domestic alternatives within two years, marking one of Beijing’s most aggressive efforts yet to eliminate key foreign technology from within its most sensitive machines. .

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People familiar with the plan said that after the week-long May holiday, employees were asked to turn in foreign computers to get local replacements running on locally developed drivers. They said the exercise, which has been authorized by central government authorities, is likely to eventually replace at least 50 million computers at the central government level alone, and they requested anonymity to discuss a sensitive issue.

The decision bolsters China’s decade-long campaign to replace imported technology with domestic alternatives, a sweeping effort to reduce its dependence on geopolitical competitors like the United States for everything from semiconductors to servers and phones. Likely to directly affect HP Inc.’s sales. and Dell Technologies Inc. , the country’s largest computer brands after shares of HP and Dell fell 2.5% in New York Friday morning.

Lenovo managed to erase its losses to reach 5% on Friday in Hong Kong, while software development company Kingsoft Corp. Also, its previous decline to achieve a gain of 3.3%. On the Chinese mainland stock exchanges, Inspur Electronic Information Industry Co. , a server maker, gained 6% while peer maker Dawning Information Industry Co jumped more than 4%. Inspur Software Co. Ltd., a subsidiary of the Inspur Group, and China National Software & Service Co. to increase their daily limits of 10%.

The push to replace foreign suppliers is part of a long-running effort to wean China off its dependence on American technology — a weakness exposed after sanctions against companies such as Huawei Technologies Co. That hit local businesses and businesses. This initiative has accelerated since 2021, when China’s central government quietly enabled a secret government-backed organization to screen and approve local suppliers in sensitive areas from cloud to semiconductor.

Explainer: China’s massive scheme for technological supremacy over the United States

The latest PC replacement project also reflects Beijing’s growing concerns about information security as well as trust in domestic hardware: the world’s largest laptop and server manufacturers today include Lenovo, Huawei and Inspur Ltd. , while homegrown developers like Kingsoft and Standard Software made quick strides in office software against the likes of Microsoft Corp. and Adobe Inc.

People said the campaign will be extended to county governments at a later date and will also stick to the two-year timeframe. The Ministry of Industry and Information Technology and the State Council Information Office did not respond to faxed requests for comment.

What Bloomberg Intelligence says

Lenovo could significantly boost sales at Beijing’s request that central government agencies and state-backed companies replace foreign-branded computers, according to Bloomberg News. This could reach more than 50 million computers over the next two years. The first US computer manufacturer relied on American chips, but had set up its own chip-manufacturing unit and invested in at least 15 semiconductor design companies.

– Nathan Naidoo, Analyst

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Read more: China’s secret committee draws up a list to replace US technology

China has been promoting the use of home-made IT products in government agencies for at least ten years, and regularly bans certain products from official purchase lists. In response, American IT giants such as Hewlett Packard Enterprise Co. And Microsoft joint ventures with Chinese government-backed companies, to secure orders from the richest state-owned enterprises.

This process has long been bogged down by shortcomings in software and electronic circuits developed in China, forcing users to rely on imported equipment. That has changed in recent years, as leading domestic companies such as Inspur and Lenovo have gained global market share, although their products still rely on high-end American components such as Intel Corp.’s semiconductors. or Advanced Micro Devices Inc. The devices were still available for purchase on a website used by central government procurement bodies, although it was unclear whether transactions would take place.

People said the latest government guidance will likely cover only computer hardware brands and software, and exclude hard-to-replace components, including microprocessors. China will mostly encourage Linux-based operating systems to replace Microsoft Windows. One person said that Shanghai-based Standard Software is one of the best providers of such tools.

One person said that some agencies, including state-owned media and cybersecurity agencies, may continue to buy high-end foreign equipment under special permits as always. But the person said this permit system could be tightened in the future.

(Updates with stock Dell and HP in third paragraph.)

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2022-05-06 14:27:36

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