Major influential industry body posits that Intel poses a security threat to China
Though CSAC isn't a government entity but has strong ties with the Chinese administration, the accusations levied against Intel (INTC) in a lengthy post on its WeChat platform might prompt a security review by China's potent cyber watchdog, the Cyberspace Administration of China (CAC).
Intel and the CAC declined to comment on the matter as Intel's shares dipped 1.5% on Wednesday, following a tech-wide slump post ASML (ASML)'s less than satisfactory update.
CSAC suggests that a network security assessment on Intel's products in China should be initiated to protect China's national security and the rights of Chinese consumers.
Last year, the CAC prohibited domestic operators of vital infrastructure from purchasing Micron Technology Inc's (MU) products after concluding that they failed the network security review.
A network security review of Intel products could potentially impact the company's revenues, a substantial portion of which stemmed from China the previous year.
Backdoor claims
The allegations arise during a time when China is grappling with US efforts to curb its access to important chip-making equipment and components, deemed essential for hindering China's military modernization by Washington.
Dan Coatsworth, an investment analyst at AJ Bell, pointed out that the tensions between the US and China are delicate, and any further focus on trade restrictions or tariffs could result in retaliation by the other side in an escalating tit-for-tat situation.
CSAC's post alleges that Intel chips, including those used for AI tasks with Xeon processors, contain a multitude of vulnerabilities. CSAC concludes that Intel's products exhibit serious issues with product quality and security management, suggesting Intel's negligent attitude towards its customers.
The industry group goes on to insinuate that operating systems embedded in all Intel processors are susceptible to backdoors engineered by the US National Security Agency (NSA).
CSAC contends that this vulnerability poses a significant threat to the critical information infrastructures of various countries, including China, and the use of Intel products brings about a serious risk to national security.
A temporary ban on Intel products could exacerbate the scarcity of AI chips in the Chinese market, which has struggled to find substitutes for Nvidia's (NVDA) cutting-edge products, now banned for export to China.
Intel has reportedly secured orders for its Xeon processors from several Chinese state-linked agencies for AI work as per a Reuters review of public tenders.
The business sector, specifically Intel, could face significant repercussions if the tech-related allegations against their products are deemed true. The Cyberspace Administration of China (CAC) suggests that a network security review, which could impact Intel's revenues heavily due to its substantial business in China, is necessary due to backdoor claims and potential vulnerabilities in Intel chips.
