China Probes Broadcom's Role in State Data Centers, FT Reports

Chinese authorities are examining the extent to which networking hardware from U.S. chipmaker Broadcom is used in state-backed data centers, according to a Financial Times report. The move is part of Beijing's broader campaign to bolster domestic technology producers and reduce reliance on foreign-made infrastructure, particularly for artificial intelligence.

Beijing's Scrutiny

The State-owned Assets Supervision and Administration Commission (SASAC), which oversees China's state-owned enterprises, has been conducting a survey of Broadcom's presence, the report said, citing people familiar with the matter. The primary focus is on the company's high-performance networking switches, a critical component for data center operations.

Preliminary findings from the survey reportedly indicate that Broadcom's switches could account for as much as 90% of the equipment currently deployed in these facilities. Following this assessment, SASAC may issue informal guidance directing state-run data centers to reduce their use of Broadcom's products.

Drive for Self-Sufficiency

This investigation aligns with Beijing's strategic push for technological self-sufficiency and supply-chain security amid ongoing rivalry with the United States. The government has been promoting a "domestic chips for domestic use" policy, aiming to increase the adoption of Chinese-made semiconductors and AI technology across the public sector.

Ad

This policy includes providing support for smaller, specialized domestic tech companies, which Beijing refers to as "little giants." The scrutiny of Broadcom follows a similar move that has already seen products from another U.S. chip giant, Nvidia, barred from use in state-backed data centers.

Market Impact

Broadcom is a major supplier of high-end networking switches in China, competing with Nvidia and domestic champion Huawei. While Nvidia's hardware has faced restrictions, Broadcom's equipment has remained widely used in the country's critical data infrastructure.

Any official or informal guidance to replace Broadcom's hardware would represent a significant headwind for the company's China business and a major opportunity for its domestic rivals. Reuters was unable to immediately verify the report, and neither Broadcom nor SASAC could be reached for comment outside of regular business hours, the original report noted.