In China, Intel is facing challenges as a trade association calls for a security investigation.

• Intel's CPU chips were found to have vulnerabilities and security risks, and the CSAC accused the company of jeopardizing national security, consumer interests, and rights.
• Intel may face serious challenges due to politically motivated accusations, as per Daniel Newman, CEO of The Futurum Group.

Local officials in China have recommended a security review of products sold by a U.S. chipmaker, alleging that the company poses "serious risks" to national security.

On Wednesday evening, the Cybersecurity Association of China disclosed alleged vulnerabilities in Intel's CPU chips, stating that the flaws in product quality and security management reflect an "irresponsible attitude toward its customers," according to a Google translation.

Intel was accused by CSAC of employing remote management tools to monitor users, secretly installing backdoors, and neglecting to address reported flaws.

The security review is happening due to heightened conflict between China and the U.S. over chip restrictions and AI dominance.

Intel is facing market challenges and pressure from China on its revenue and market share in the region, according to Newman.

In 2023, China contributed 27.4% to Intel's revenue, which is crucial to the company's financial stability amidst a decline in its stock value following disappointing earnings and layoffs.

Due to U.S. chip policy, the company is restricted from exporting some of its advanced products to Chinese clients and is also barred from shipping to certain Chinese clients.

The Chips and Science Act has unfairly targeted China's semiconductor industry, according to CSAC, which also noted that Intel has benefited greatly from the legislation.

The U.S. law prohibits imports from China's Xinjiang region due to the belief that all goods produced there are the result of forced labor. CSAC also disagreed with the company's policy of prohibiting its suppliers from using any labor or products from the Xinjiang region.

Intel has previously warned that export restrictions on China could hurt its sales.

To counter U.S. restrictions and become self-sufficient in chips, China has reportedly instructed its major telecommunications carriers to stop using foreign chips from companies such as Intel.

Beijing is likely to employ a strategy similar to the one it used against American chip giant Micron last year, which had a significant impact on the semiconductor market, according to Futurum's Newman.

Micron products were banned from being purchased by companies classified as part of China's "critical information infrastructure" last year.

The Cyberspace Administration of China found that Micron products posed "network security risks" and endangered national security through an investigation.

Intel did not immediately respond to a CNBC inquiry.