Beijing has been accelerating a de-Americanization campaign in core technologies like semiconductors and servers as the Chinese government has backed homegrown chipset makers amid the escalating tech cold war with the U.S. in 2019. Chipmaker Loongson Technology, a joint venture of the Beijing-based Chinese Academy of Sciences (CAS) and the Beijing municipal government, in December unveiled a new generation of general-purpose central processing units (CPUs) with improved performance. The company aims to compete with global rivals in 2020 and 2021 by promoting a 12-nanometer technology and world-class processing capabilities. All the chipsets’ source codes were designed in China, with the security mechanism, core processor and open-source operating system ensuring compatibility. Loongson Technology has been exploring setting up a new information technology ecosystem beyond U.S. tech giant Intel and UK-based Arm systems – the two dominant architectures for processors. Loongson said it expected to ship over 500,000 chipsets in 2019. It took two decades for a Chinese firm to develop its own chipset.

2019 marks a year when China and the U.S. descended into a new cold war not only in trade but also in high technology. While the world’s two largest economies have agreed on a phase one trade deal, Washington has not eased its restrictions on high-tech exports to China, a rising strategic rival in emerging technologies such as artificial intelligence (AI), big data and 5G. “2019 is a turning point for Chinese homegrown technologies,” Ni Guangnan, Academician with the Chinese Academy of Engineering (CAE) in Beijing, told the Global Times. “The Huawei issue helped us realize that core technologies have to be in our own hands, which should also be controllable. That largely boosted the replacement process.” Beijing has long pursued homegrown core technology development, but the task became more urgent after the U.S. cut supply to Huawei in May. “It partly explains the acceleration of homegrown technology development, as the central government has been very determined in making concrete progress and supporting domestic sectors,” Fang Xingdong, Founder of Beijing-based technology think tank ChinaLabs, said.

The central and local governments have expanded procurement of homegrown software, chipsets and servers this year. Some offices and public institutions have removed foreign computer equipment and software, increasing the country’s reliance on Chinese technologies. At state banks and security firms, office PCs of foreign brands have been replaced with domestic products.

Chipset and operating systems are considered as shortcomings in China’s IT industry, and homegrown technology is considered to be needed to safeguard the country’s network security. Domestic tech firms and research institutions including Lenovo, Sugon, Founder Group and the China Academy of Launch Vehicle Technology have come up with PCs, laptops, servers, network security equipment and industrial computers based on the new Loongson CPU. “Considering the country’s ambition in technological self-reliance, it will take three years for domestic companies to catch up with improving performance and building ecosystem,” ChinaLabs’ Fang said. The wholesale replacement of foreign computer equipment and software at government offices will generate a potential CNY200 billion market from 2019 to 2020, the Global Times reports.