Shares of Netgear (NASDAQ:NTGR) rose more than 11% on Tuesday morning after US regulators moved to restrict the import and sale of newer consumer-grade routers made outside the country.
The Federal Communications Commission said on Monday it had updated its list of equipment deemed insufficiently secure, adding all consumer-grade routers manufactured abroad to the restrictions.
The move effectively bars new router models made outside the United States from being approved for import, marketing, or sale without additional scrutiny.
The decision places routers on a similar footing to foreign-made drones, which were banned in the US late last year.
“Malicious actors have exploited security gaps in foreign-made routers to attack American households, disrupt networks, enable espionage, and facilitate intellectual property theft,” the FCC said in its announcement.
Under the new rules, consumers will still be able to use foreign-made routers they already own, but any new device models will face stricter oversight. Manufacturers of routers produced outside the US must now obtain conditional approval before importing or selling their products, a process that requires disclosure of foreign ownership or influence and plans to shift manufacturing to the US.
The policy comes amid heightened concerns over cybersecurity vulnerabilities tied to networking equipment. Last year, TP-Link, a router brand made in China and widely sold in the US, drew political scrutiny following a series of cyberattacks that raised questions about potential security risks in consumer networking devices.
Netgear, a US-based company that manufactures its products abroad, is among the established players in the market that may be affected by the new regulatory framework.