China orders firms to ditch US, Israeli cybersecurity software
What's the story
China has ordered its domestic firms to stop using cybersecurity software from around a dozen US and Israeli companies. The move is driven by national security concerns amid rising trade and diplomatic tensions with the US. This comes as part of China's broader strategy to replace Western technology with homegrown alternatives.
Market response
Affected companies and market impact
The US firms affected by the ban include VMware, a subsidiary of Broadcom, Palo Alto Networks, and Fortinet. Israeli firm Check Point Software Technologies is also among those hit by the ban. Following the news of this move, shares of Broadcom and Palo Alto Networks fell over 1% in premarket trading while Fortinet's shares dropped nearly 3%.
Data fears
Concerns over data security
Chinese authorities are worried that the cybersecurity software from these companies could be used to collect as well as transmit confidential information abroad. The exact number of Chinese firms that have received this notice is still unclear, as Reuters could not confirm the details due to the sensitivity of the situation.
Domestic players
China's cybersecurity landscape
China's biggest cybersecurity providers include 360 Security Technology and Neusoft. The country has been trying to replace Western computer equipment and word processing software due to fears of potential hacking by foreign powers. This move is part of China's bigger plan to strengthen its semiconductor and artificial intelligence sectors amid ongoing tensions with the West over these industries.