Call for Intel Product Review Issued by Chinese Cyber Association

The Cybersecurity Association of China (CSAC) has called for a security review of Intel products sold in China, alleging that the US chipmaker has consistently harmed the country's national security and interests. Although the CSAC is an industry group rather than an official government entity, it maintains close ties to the Chinese state. The serious nature of the allegations, detailed in a lengthy post on its official WeChat account, has the potential to prompt action from China's influential cyberspace regulator, the Cyberspace Administration of China (CAC).

In its statement, the CSAC recommended initiating a network security review of Intel's products sold in China, arguing that such a measure is necessary to effectively safeguard China's national security and the legitimate rights and interests of Chinese consumers. The call for a review comes in the context of heightened scrutiny on foreign technology companies operating within China. Last year, the CAC banned domestic operators of key infrastructure from purchasing products made by US memory chipmaker Micron Technology Inc. after determining that its products did not pass a network security review. Should a similar review be conducted on Intel products, it could have significant repercussions for the company's financial performance, as over 25% of Intel's revenue came from China in the past year.

The allegations against Intel emerge amid a broader context of geopolitical tensions, particularly as the United States leads efforts to restrict China's access to crucial chipmaking equipment and components. This move is framed by Washington as an effort to prevent the modernization of China's military capabilities. Dan Coatsworth, an investment analyst at AJ Bell, noted the fragility of US-China relations, suggesting that ongoing discussions about trade restrictions and tariffs may provoke retaliatory measures from China.

In its critique, the CSAC accused Intel's chips, including its Xeon processors commonly used for artificial intelligence tasks, of harboring multiple vulnerabilities. The association asserted that Intel displays significant defects in product quality and security management, indicating a lack of responsibility towards its customers. Furthermore, the CSAC claimed that operating systems embedded within all Intel processors are susceptible to backdoors allegedly created by the US National Security Agency (NSA), posing a substantial security threat to critical information infrastructures globally, including in China. The group emphasized that the use of Intel products constitutes a serious risk to national security.

A ban on Intel products, even if temporary, could exacerbate the already tight supply of AI chips within the Chinese market. The market has been struggling to find viable alternatives to the advanced products offered by Nvidia, which currently dominate globally but are prohibited from export to China. Despite the challenges, Intel has reportedly secured orders for its Xeon processors from several Chinese state-linked agencies for use in AI-related work this year, indicating that the company continues to navigate the complexities of operating in the Chinese technology landscape.

As the situation develops, the outcome of the CSAC's allegations and any subsequent actions taken by the CAC will be closely monitored, given their potential implications for both Intel's business operations in China and the broader geopolitical landscape concerning technology and national security.