Intel faces scrutiny in China over alleged security risks and vulnerabilities in its chips

In brief: As tensions between the US and China continue to rise, the Cybersecurity Association of China (CSAC) has called for a review of Team Blue's products sold in the Asian nation, alleging that the firm has "constantly harmed" the country's national security and interests. Intel's China unit has responded with assurances that it has always prioritized product safety and quality.

On its official WeChat account, CSAC claimed that Intel's chips are a threat due to their "frequent vulnerabilities and high failure rates." It added that the company's CPUs, including Xeon processors, have major defects when it comes to product quality and security management, indicating an extremely irresponsible attitude towards customers.

The CSAC added that operating systems embedded in all Intel processors are vulnerable to backdoors created by the US National Security Agency.

"This poses a great security threat to the critical information infrastructures of countries all over the world, including China [...] the use of Intel products poses a serious risk to national security," the CSAC said.

The association also referenced the Raptor Lake instability issues, noting that certain Intel chips can cause video games to crash. The CSAC went on to criticize Intel for slow responses to prior security breach complaints.

"It is recommended that a network security review is initiated on the products Intel sells in China, so as to effectively safeguard China's national security and the legitimate rights and interests of Chinese consumers," the CSAC said.

While the CSAC is an industry group and not a government body, it has close ties to Beijing that could result in a security review of Intel's projects by the Cyberspace Administration of China (CAC). The regulator banned Micron chips in China last year over what it claimed was a security review of its products that showed they have relatively serious potential network security issues. These pose major security risks to China's critical infrastructure supply chain, which includes state-owned banks, transportation, and telecoms.

The day after the CSAC post, China's top spy agency, the Ministry of State Security (MSS), warned that state security threats were becoming more pronounced.

Intel's China unit responded to the post on its official WeChat account. "We will maintain communication with the relevant authorities, clarify any concerns, and reaffirm our commitment to product safety and quality," it wrote.

China accounted for 27% of Intel's total revenue of $54.2 billion in 2023. According to Reuters, the company has orders for its Xeon processors from several Chinese state-linked agencies for use in AI work.

A review and a ban on its products in China couldn't come at a worse time for Intel. It is struggling on multiple fronts as its share price falls, revenues disappoint, and more cost-cutting layoffs are implemented. Reports claim that Qualcomm is expected to decide whether to make a formal offer to acquire the firm after the US Presidential election.

Banning Intel products would have a significant impact on China, too. The US prohibits the export of Nvidia's top AI chips to the country. Losing Intel's alternatives would no doubt further harm China's ambitions in AI development.

In March, China introduced new guidelines that will phase out US processors and software from its government computers and servers. The rules mean that CPUs from Intel and AMD, along with Microsoft Windows and foreign-made database software, will be replaced with homegrown alternatives.