Chinese authorities have launched a review of Broadcom Inc. hardware used in state-backed data centers, the latest escalation in Beijing’s bid to weed out foreign technology and achieve self-reliance in artificial intelligence (AI) infrastructure.

The State-owned Assets Supervision and Administration Commission (SASAC), the government body overseeing China’s State-owned enterprises, has spent the past several weeks surveying how widely the U.S. chipmaker’s networking switches are deployed across state-controlled data centers, according to a report in the Financial Times, citing sources familiar with the matter.

High-performance switches play a critical role in data center operations, facilitating the rapid transfer of massive data volumes essential for training and running advanced AI models. SASAC’s inquiry revealed that Broadcom switches account for up to 90% of the networking equipment in certain State-owned facilities, highlighting China’s heavy reliance on American hardware despite ongoing geopolitical friction.

The findings are expected to prompt informal procurement guidance urging state-backed organizations to reduce their dependence on Broadcom equipment. The initiative directly supports Beijing’s “domestic chips for domestic use” policy, which aims to replace foreign components with homegrown alternatives across the public sector and critical infrastructure.

While Beijing has already restricted the use of NVIDIA Corp.  products in state-backed data centers, Broadcom’s high-end switches have maintained a dominant foothold in the Chinese market. Alongside Broadcom and NVIDIA, Chinese technology giant Huawei is a primary supplier in the sector.

Beyond hardware use, SASAC is reportedly investigating whether Broadcom has leveraged its market leadership to enforce large minimum purchase requirements or bundle additional products, the FT reported.

Industry insiders note that Broadcom’s commercial terms have previously limited the ability of domestic server and networking providers such as H3C Technologies and Shenzhen-listed Ruijie Networks to incorporate alternative components.

A gradual phase-out of Broadcom from state data centers could unlock a multi-billion-dollar market for domestic vendors. Local manufacturers like Huawei, H3C, and Ruijie stand to gain significant market share as government agencies and state enterprises shift their massive IT procurement budgets toward domestic suppliers.

However, transitioning away from Broadcom presents technological challenges. Industry experts point out that while Huawei has made substantial strides in improving connectivity speeds, its current switches remain less energy-efficient than Broadcom’s, which could increase operational and electricity costs for data center operators.

The policy shift is not expected to involve an outright, formal ban or the dismantling of existing infrastructure. Furthermore, the restrictions currently apply only to state-controlled entities, leaving major private tech companies like ByteDance and Alibaba free to continue using foreign hardware.

Instead, the move functions as part of a long-term, structural effort to nationalize supply chains and shield China’s tech ecosystem from potential U.S. sanctions and trade restrictions.

SASAC, Broadcom, H3C, and Ruijie Networks did not respond to requests for comment.