Beijing ordered Chinese companies to stop using foreign microchips, says WSJ

The Chinese government is asking telecom companies in the Asian country to make plans to stop using foreign microchips, according to the Wall Street Journal. The newspaper based their article on interviews with anonymous sources. The move appears to be another step in China's technological rivalry with the West.

The business newspaper reports that by 2027, Chinese manufacturers must produce the chips used for the core networks in China. The Chinese Ministry of Industry and Information Technology issued the directive earlier this year as part of guidelines for the country's business industry.

Beijing is specifically thwarting American chip makers with this move. In recent years, companies like Intel and AMD have been very active in delivering chips to Chinese telecom companies.

It is not the first time China has tried to keep foreign chips out of its business sector. Last month, it was discovered that electric car manufacturers were asked to use as many Chinese chips as possible.

The United States, in turn, has been attempting to prevent China from gaining access to high-grade technology from the West. Many export restrictions are placed on companies doing business with Chinese companies. This happens under the guise of national security. The Americans fear China using the technology for military purposes.

After pressure from Washington, the Dutch government has also implemented limitations on exports to China. Therefore, the Veldhoven chip manufacturer ASML cannot deliver several of their most highly advanced modes of machinery to Chinese companies.

China is trying to compensate for that loss by investing in its own chip industry. Despite this, Prime Minister Mark Rutte has said he sees opportunities for more business with China.

Earlier this week, the Japanese business newspaper Nikkei reported that the Chinese tech company Huawei is working on a large factory in Shanghai to produce more chip machines. This would ensure that Huawei could make steps in a market that is currently mostly in control of ASML.

Huawei also reportedly hired people who used to work for ASML and other Western companies. It is unknown how many people this was about.

The Chinese company allegedly promised very high salaries to technicians with the necessary knowledge and experience. This sounds tempting, but sources have told Nikkei that working for Huawei is exceptionally challenging. The government allegedly expects people to work very long days and hardly gives any time off at the weekend.