China is intensifying efforts to reduce its reliance on foreign technology by aiming to eliminate American chip makers from its telecom infrastructure by 2027, according to the Wall Street Journal.

The country's Ministry of Industry and Information Technology (MIIT) earlier this year directed major telecom carriers to phase out foreign processors that are crucial to their networks by the specified deadline.

This move is expected to impact American chip giants (NASDAQ:) and Advanced Micro Devices (NASDAQ:).

Shares in these two companies fell 1.3% and 2%, respectively, in early New York trading on Friday.

State-owned mobile operators have been instructed to assess their networks for non-Chinese semiconductors and develop plans to replace them, the report added.

The Chinese government's past efforts to reduce reliance on foreign semiconductors were hindered by the lack of domestically produced chips of comparable quality. However, recent improvements in the quality and stability of local chips have made it feasible for telecom carriers to switch to domestic alternatives.

U.S. lawmakers have imposed restrictions on Chinese telecom equipment and high-end AI chips from American chip companies, citing national security concerns.

Chinese authorities have long sought to bolster domestic supply chains and reduce reliance on foreign suppliers. Similar directives in other sectors have already led to a gradual loss of market share for U.S. software and hardware firms in China.