China is actively removing American technology to achieve its objective of technological self-reliance. Local firms within China have reportedly been instructed to cease using cybersecurity software from specific companies in the U.S. and Israel, citing concerns that Western technology is susceptible to cyberattacks.
Chinese authorities have directed local companies to stop utilizing cybersecurity software produced by over 12 firms from the United States and Israel. This decision stems from worries that Western software could be exploited to gather and transmit sensitive Chinese data to foreign governments.
Affected Cybersecurity Companies
The list of embargoed U.S. companies includes Broadcom-owned VMware, Palo Alto Networks, and Fortinet. Other prominent American firms impacted by this directive are CrowdStrike, SentinelOne, Rapid7, and McAfee. Even Alphabet-owned entities, such as Mandiant and Wiz, are included on this blacklist.
The ban also extends to certain companies from Israel, including Check Point Software Technologies, Orca Security, and Cato Networks. CyberArk, which was recently acquired by Palo Alto Networks, is also on the restricted list. Furthermore, Imperva, now owned by the French firm Thales, has faced restrictions.
In response to this development, Broadcom's shares experienced a decline of more than 5% during Wednesday's trading session. Palo Alto Networks saw a reduction of approximately 1%, while Fortinet's stock fell by roughly 2%.
CrowdStrike, SentinelOne, and Recorded Future have stated that they conduct business within China. In contrast, other companies like Fortinet operate three offices in mainland China and one in Hong Kong. Broadcom maintains six locations in China, and Palo Alto Networks has five.
Reasons Behind China's Ban
China and the United States are currently engaged in a period of intense competition for leadership in technological innovation. Beijing has consistently promoted a policy known as “Xinchuang,” which aims to foster self-sufficiency within the technology sector.
Chinese officials have also voiced increasing apprehensions that Western equipment is inherently vulnerable to hacking by foreign adversaries, particularly given that Western cybersecurity firms frequently accuse China of state-sponsored hacking activities.
Check Point, for example, recently released a report detailing a Chinese operation that targeted European government offices. Palo Alto Networks also recently alleged that Chinese hackers were targeting diplomats globally. Beijing has consistently denied these accusations.
Chinese firms are also facing pressure to transition to local providers, such as 360 Security Technology and Neusoft. The United States has previously implemented similar measures against Chinese and Russian companies, including the ban on Russia's Kaspersky Lab software in 2024.
More recently, China has intensified its efforts to compel state-owned enterprises to discontinue the use of Western consulting firms and hardware.