China Orders Local Firms to Dump US, Israeli Cybersecurity Software in Major Tech Decoupling Move

Beijing slams the door on foreign digital guardians.

The Great Firewall Gets a New Gatekeeper

Chinese authorities have issued a sweeping directive, mandating domestic companies to purge their systems of cybersecurity tools developed in the United States and Israel. The move signals a sharp acceleration in the technological decoupling from Western providers, pushing firms toward homegrown alternatives.

Security or Sovereignty?

While framed as a national security imperative—shielding critical infrastructure from potential foreign backdoors—the order doubles as a massive stimulus package for China's domestic tech sector. It forces a sudden, large-scale migration of digital trust. Analysts note the compliance clock is ticking, with audits expected to follow.

The Localization Mandate

This isn't a suggestion; it's an ultimatum. The notice creates an immediate, captive market for Chinese cybersecurity firms. Expect a scramble for contracts and a wave of "secure-by-origin" marketing. For multinationals operating in China, it adds another complex layer to the already fraught calculus of data governance and operational compliance.

The push for technological self-reliance just entered its most sensitive domain: the software that watches the watchers. One financier dryly noted it's a brilliant way to boost local valuations—mandate the demand. The global splinternet just got another partition.

What cybersecurity companies are banned in China? 

The list of embargoed U.S. companies includes Broadcom-owned VMware, Palo Alto Networks, and Fortinet. Other major American firms affected are CrowdStrike, SentinelOne, Rapid7, and McAfee. Even Alphabet-owned firms, such as Mandiant and Wiz, are included on the blacklist. 

The ban also targets some companies from Israel including, Check Point Software Technologies, Orca Security, and Cato Networks. CyberArk, which was recently purchased by Palo Alto Networks, is also on the list. Additionally, Imperva, which is now owned by the French firm Thales, has been restricted.

In reaction to the news, Broadcom’s shares dropped by more than 5% during Wednesday trading. Palo Alto Networks saw a decline of about 1%, while Fortinet fell by roughly 2%. 

CrowdStrike, SentinelOne and Recorded Future clarified that they do business in the country, but other companies like Fortinet operate three offices in mainland China and one in Hong Kong. Broadcom has six locations in China, and Palo Alto Networks has five. 

Why is China banning cybersecurity firms?

China and the U.S. are currently in a period of intense competition for the lead in technological innovation. Beijing has long promoted a policy known as “Xinchuang,” which aims to achieve self-reliance in the technology sector. 

Chinese officials have also expressed growing concerns that Western equipment is inherently vulnerable to hacking by foreign powers since Western cybersecurity firms frequently allege Chinese state-sponsored hacking. 

Check Point, for instance, recently published a report about a Chinese operation targeting European government offices. Palo Alto Networks also recently alleged that Chinese hackers were targeting diplomats worldwide. Beijing has consistently denied these allegations.

Chinese firms are also being pressured to switch to local providers like 360 Security Technology and Neusoft. The U.S. previously took similar actions against Chinese and Russian firms, banning Russia’s Kaspersky Lab software in 2024. 

Recently, China has also increased pressure on its state-owned enterprises to stop using Western consulting firms and hardware.

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