The State-owned Assets Supervision and Administration Commission investigates the usage of Broadcom switches in state-owned enterprise data centers

According to the Financial Times, Chinese authorities are reviewing the use of Broadcom hardware by state-owned data centers to support domestic manufacturers and reduce reliance on foreign artificial intelligence infrastructure. The State-owned Assets Supervision and Administration Commission has been investigating how many Broadcom switches are used by state-controlled data centers in recent weeks, according to two informed sources.

One of them stated that the penetration rate of Broadcom switches in state-owned enterprises could be as high as 90%, and preliminary results may lead the commission to issue informal guidance to reduce the use of Broadcom switches in domestic data centers. The sources indicated that state-owned data centers are no longer allowed to use NVIDIA products but still use a large number of Broadcom switches. The commission is also investigating whether Broadcom is leveraging its market-leading position to bundle other products or requiring one-time purchases of tens of thousands of switch chips.

The sources noted that these practices have restricted Chinese companies like H3C and Ruijie Networks from placing orders with other switch manufacturers such as Huawei. H3C and Ruijie Networks are often included in the procurement recommendation lists for government agencies, public institutions, and state-owned enterprises, which spend billions of dollars annually on information technology products.