The ongoing trade tensions between the United States and China have taken a new turn, with the Cybersecurity Association of China (CSAC) calling for a security review of products from Intel Corporation. The CSAC has expressed concerns over alleged flaws in Intel’s Central Processing Units (CPUs) and their security management practices, raising the specter of potential threats to national security.
In a statement, the CSAC accused Intel of exploiting remote management features within its chips for surveillance purposes and covertly installing backdoors, allowing for unauthorized access to sensitive information. The organization also criticized the company for failing to address reported defects in its chips. These accusations come at a critical juncture, amidst escalating tensions between China and the United States over chip controls and the race for artificial intelligence (AI) leadership.
Daniel Newman, CEO of The Futurum Group, a technology research and advisory firm, believes that the timing of the security review is strategic. Intel has faced recent challenges in its business, and it holds significant revenue and market share in the Chinese market. This move could potentially put pressure on Intel to address CSAC’s concerns, especially considering China’s significant economic influence.
The Chinese market plays a crucial role in Intel’s global revenue, representing 27.4% of its total revenue in 2023. However, US chip policy has restricted Intel’s ability to export some of its most advanced products to China, and certain clients have been completely barred from receiving shipments.
Adding fuel to the fire, CSAC has also criticized Intel for benefiting from the Biden administration’s Chips and Science Act, which aims to boost American semiconductor production. The Chinese organization claims that this act has unfairly hampered China’s semiconductor industry.
In response to the allegations, Intel has maintained that it prioritizes product safety and quality. The company has stated its commitment to maintaining communication with relevant authorities to clarify the issues raised by CSAC.
This incident sheds light on the increasing geopolitical tension surrounding the semiconductor industry. Earlier this year, Intel announced plans to launch two AI chips with reduced capabilities to comply with US sanctions. While aiming to maximize its chip exports to China, the company faces the dilemma of navigating stringent US export controls.
Meanwhile, China continues to invest heavily in its semiconductor industry, with investments in chipmaking equipment reaching $25 billion in the first half of 2024. This figure surpasses the combined spending of South Korea, Taiwan, and the United States, highlighting China’s determination to become a dominant player in the global semiconductor landscape.
The security review of Intel’s products marks a significant escalation in the trade war between the US and China. It remains to be seen how Intel will respond to the allegations and what impact this review will have on the company’s operations in China. As both nations continue to vie for technological supremacy, the semiconductor industry is at the heart of this geopolitical tug-of-war, with potential implications for global economic stability and the future of technological advancement.
