(Yicai) Oct. 17 -- Shares of Chinese core processor chip makers gained after an influential Chinese cybersecurity industry group urged a thorough security review of Intel products sold in the country, saying the US chip supplier has “constantly harmed” the nation’s security and interests.

Ferrotec An Hui Technology Development [SHE: 301297] soared by its 20 percent daily trading limit today to close at CNY24.98 (USD3.50) per share. Loongson Technology [SHA: 688047] rose 9.1 percent to CNY131.97 (USD18.50), while Cambricon [SHA: 688256] added 4.7 percent to CNY358.09 (USD50.20). 

In a document published yesterday, the CyberSecurity Association of China recommended initiating a systematic cybersecurity review of Intel products sold in the country, saying there have been a number of security problems with them along with poor reliability.

Such a review would be conducted by the Cyberspace Administration of China.

In pre-market trading in New York today, shares of Intel [NASDAQ: INTC], the world’s largest producer of central processing units, were trading up 1 percent at USD22.54 each as of 8.08 a.m. local time. They fell over 1.5 percent yesterday.

According to the CSAC, there are high-risk vulnerabilities in a product called Intelligent Platform Management Interface, which was designed by Intel together with HP and other firms to allow users to manage devices remotely. This has resulted in hacking risks for a large number of servers around the world.

‘Product Safety and Quality First’

“As a multinational company operating in China for nearly 40 years, Intel strictly abides by the laws and regulations applicable to the place where it does business,” Intel China said via its official WeChat account today.

“Intel always puts product safety and quality first and has been actively working closely with customers and the industry to ensure product safety and quality,” it said. “We will maintain communication with relevant departments to clarify relevant questions and demonstrate our firm commitment to product safety and quality.”

The industry group also noted that the US Chips and Science Act has unreasonably suppressed China’s semiconductor industry, and Intel has been the main beneficiary of the legislation.

Unclear Substitution

Industry insiders said network security is an important part of national security, and domestic companies can offer technical solutions without the vulnerabilities found in Intel products. However, there is a lack of clarity about which Intel products can currently be substituted with domestic CPU products.

Although Intel has a large share of China’s CPU market, it has been eaten into recently by domestic rivals such as Kunpeng, Phytium and Loongson. It is believed that some industries with high requirements for information security may choose domestic CPU products, such as government departments and financial institutions. 

But a senior semiconductor industry insider pointed out that it will be harder to replace Intel chips in general consumer products, at least in the short term.

Intel's CPUs accounted for about 77 percent of the Chinese desktop market in 2021, about 81 percent of the laptop market, and about 91 percent of the x86 server market, according to data from the Cyberspace Security Association of China.

The CPU localization rate in China reached 30 to 40 percent in 2022, per the Leadleo Research Institute.

Editor: Tom Litting