Intel Corp (NASDAQ:INTC, ETR:INL) and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) both saw their shares fall 4% over the weekend after reports revealed the Chinese government plans to phase out microprocessors created by the US tech firms.
The changes are part of new guidelines launched by China which are aimed at replacing foreign technology used in government PCs and servers with national alternatives.
Part of the changes also attempts to remove the Microsoft Windows operating system with domestic versions, while also removing any foreign-made database software.
China’s step up in localization highlights the growing tensions between it and the US, with the two imposing sanctions on companies from the other country.
Earlier this month, the US government voted to pass a bill that would force TikTok owner ByteDance to divest its ownership or face a comprehensive ban across the country.
In December last year, China’s state testing agency revealed a list of “safe and reliable” processors and operating systems – all of which were Chinese companies.
Last week, Intel shares rallied after being awarded US$8.5 billion in government grants and a further US$11 billion in loans to ramp up semiconductor manufacturing in the US.
Meanwhile, Intel’s expansion projects are expected to create some 20,000 construction jobs, alongside 10,000 roles in chip manufacturing.