China reviews Broadcom switch use in state-backed data centres, FT reports

China is evaluating the usage of Broadcom's (NASDAQ:AVGO) switches in state-supported data centers, as reported by the Financial Times on Wednesday, according to sources familiar with the situation. The State-owned Assets Supervision and Administration Commission (SASAC), responsible for overseeing state-owned entities, has recently analyzed the quantity of Broadcom switches in state-controlled data centers, the FT disclosed.

One source informed the FT that the survey revealed Broadcom's switches could make up to 90% of equipment in certain state-owned companies. This discovery might lead to informal recommendations to diminish dependence on Broadcom's products, which are produced in the United States. Broadcom, Nvidia (NASDAQ:NVDA), and Huawei are among the suppliers of high-end data-center switches in China, though state-backed facilities have already been prohibited from utilizing Nvidia products, the FT noted.

The review aligns with Beijing's "domestic chips for domestic use" initiative and could potentially benefit Chinese firms such as Huawei, H3C Technologies, and Ruijie Networks (SZ:301165).