Abstract: According to Bloomberg yesterday, Chinese authorities have ordered government agencies and state-owned enterprises to replace foreign brand PCs with domestic PCs within two years, which will be the most positive move in the localization of China's information industry.
According to Bloomberg yesterday, Chinese authorities have ordered government agencies and state-owned enterprises to replace foreign brand PCs with domestic PCs within two years, which will be the most positive move in the localization of China's information industry.
Domestic PC substitution began to accelerate
Bloomberg reported that according to people familiar with the matter, after the May Day holiday, the staff of relevant departments have begun to be required to hand over old foreign-branded computers and switch to domestic PCs equipped with locally developed operating systems. Authorized by the Chinese authorities, at least 50 million PCs may have to be replaced at the central and central enterprise levels alone, and will soon be extended to provincial governments, which is expected to be completed within two years.
People familiar with the matter also pointed out that the latest requirements of the authorities may only involve personal computer brands and software, and do not include the replacement of hard-to-replace components such as Intel and AMD processors. The Chinese government is currently mainly encouraging the replacement of Microsoft Windows with the Linux operating system.
According to a source, the state media and cybersecurity departments may continue to purchase foreign PC equipment under special licensing conditions as in the past, but this licensing system may also be tightened in the future.
The move would reduce China's dependence on geopolitical rivals such as the United States in everything from semiconductors to servers and mobile phones. This situation may directly affect the sales and market share of Hp (HP), Dell and other companies in China.
Affected by the news, the stock prices of domestic PC supply chain manufacturers such as Lenovo Group, China Great Wall, Kingsoft, Inspur Information, Sugon, ArcherMind Software, Inspur Software and China Software all rose sharply on the morning of May 6, even in the case of the A-share market fell by more than 2% on the same day, China Great Wall, ArcherMind Technology, China Software, etc. still closed with a limit.
Xin Zhixun also found that relevant netizens posted similar information on social media yesterday. The netizen said, "The unit requires that the old computer be handed over after May Day and replaced by a new domestic computer and a new system." However, the netizen said that the new system is not compatible with Windows software, so it is necessary to install a Windows simulator, resulting in a regression in office efficiency.
Indeed, if you are accustomed to the Windows operating system and Microsoft office software, and suddenly switch to the domestic Linux operating system and domestic office software, there will indeed be a process of learning and adaptation, which will indeed lead to a decrease in office efficiency during this period. However, in the context of the Sino-US trade war, science and technology war, and after the Russian-Ukrainian conflict, the comprehensive sanctions imposed by Europe and the United States on Russia can make us realize that the localization of key areas must indeed be done.
Involving 50 million PCs ?
According to The Core Intelligence, the replacement of domestic PCs is not as reported by Bloomberg, which currently only stays at the level of the central government and central enterprises and provincial governments, but some prefecture-level cities have begun to fully replace, and may be based on the localization of domestic PCs with domestic CPU operating systems, and the goal is to completely replace PCs in government agencies and state-owned enterprises within 2 years. The number of 50 million PCs replaced should also refer to the whole country, not only the central government and central enterprises.
According to the 2015 Statistical Communiqué on the Development of Human Resources and Social Security Undertakings, as of 2015, there were 7.167 million civil servants in the country. Although these data will change every year, the change should not be too large. Considering that there is still a considerable proportion of non-staff civil servants, the overall number of government civil servants (both on and off-staff) should exceed 10 million.
According to data from the National Bureau of Statistics, the number of employees in state-owned units of public administration and social organizations in 2018 was more than 18 million (including government civil servants).
We look at the 1:1 PC ratio, that is to say, the government and related agencies completely replace the domestic PC, which requires about 18 million PCs.
In terms of state-owned enterprises, according to a set of data released by the state statistics, the number of people employed in mainland state-owned enterprises in 2019 was 54.73 million (including outside the establishment). Consider that when a certain percentage of the people in the work may not require a PC (such as some production enterprises production line workers) and there is a common PC situation, so the overall number of PCs required needs to be discounted.
According to data from the National Bureau of Statistics, the number of computers used by enterprises nationwide in 2019 was 54.43 million. In 2019, the average number of computers used by enterprises in the country was 32 per 100 people. Among them, the number of computers used per 100 people in the information transmission, software and information technology service industry is 131, the number of computers used per 100 people in the education industry is 108, and the number of computers used per 100 people in scientific research and technical services is 86 computers per 100 people.
Therefore, if we optimistically calculate according to the 100:60 PC ratio of state-owned enterprise employees, the comprehensive replacement of state-owned enterprise PCs will probably require more than 3200 PCs.
On the whole, the number of "50 million PCs" reported by Bloomberg should actually be the number needed by relevant government agencies and state-owned enterprises across the country to completely replace domestic PCs.
To be completed by the end of 2022?
In addition, according to the information learned by Xinzhixun in a certain industry activity in 2020, as early as 2014, domestic equipment began to be deployed in the form of pilots in the national party and government organs. With the gradual maturity of the domestic PC industry chain in recent years, the replacement of domestic PCs in party and government organs, as well as eight key industries such as banking, insurance, securities, railways, civil aviation, taxation, customs, and electric power, is also accelerating. At that time, the goal shown on the PPT was to achieve a comprehensive replacement of the office software and hardware of the party and government organs nationwide by the end of 2022.
It is unclear whether this time node will be postponed to the end of 2023, or whether it will still be completed by the end of 2022.
Is the localization PC industry chain ready?
It can be said that the accelerated replacement of domestic PCs by government agencies and state-owned enterprises not only reflects the Chinese government's increasing concern for information security, but also shows confidence in domestic PCs.
For nearly 10 years, Chinese authorities have encouraged government agencies to adopt domestic products and excluded some foreign products from government procurement lists. Therefore, American giants such as HP and Microsoft have established joint ventures with Chinese government-backed companies to obtain orders from the Chinese government and state-owned enterprises.
Previously, due to China's backwardness in software systems and semiconductors, it had a high dependence on foreign countries in the PC industry chain. However, as Chinese companies such as Lenovo Group and Inspur Information began to achieve a high global market share in the PC and server markets, the localization process of the PC industry chain was also accelerated.
Although, many current PC products may still rely on high-end components in the United States, such as Intel and AMD CPUs. However, in recent years, China has also begun to actively promote the development of domestic CPUs.
For example, state-owned enterprises, VIA and AMD have established joint ventures Shanghai Zhaoxin and Tianjin Haiguang respectively, thus obtaining X86 authorization and launching a relatively independent and controllable domestic X86 CPU. At the same time, Huawei and Feiteng have also launched self-developed PC and server CPUs based on Arm instruction set, and LoongArch has launched a self-developed LoongArch architecture CPU. After rapid development in recent years, these domestic CPU manufacturers have also built their own PC/server ecosystems.
In addition, in terms of DRAM and NAND Flash chips required for PCs, domestic Changxin Storage and Yangtze River Storage have also made breakthroughs. Changxin Storage is about to mass-produce DDR5, And Changjiang Storage has already mass-produced 128-layer 3D NAND Flash chips; in terms of display panels, domestic BOE, TCL Huaxing, etc. have already reached the international leading level; in terms of GPU graphics cards, there are already domestic manufacturers such as Jingjia Micro and Chipping Technology. At the end of last year, Jingjiawei released the flagship GPU new product JH920, which is said to be in line with NVIDIA's GeForce GTX 1050, and received 100,000 orders in March this year.
In addition to key hardware, domestic PC operating systems and software have also developed rapidly in recent years.
After the integration of Galaxy Kirin and Winning Bid Kirin in 2019, the development of Kirin OS has further accelerated. At present, Kirin Software has nearly 2,000 employees. Its latest Galaxy Kirin desktop operating system V10 has realized the same source code construction, the same source support four technical routes of the six domestic CPU platforms (Feiteng, Huawei Kunpeng, Zhaoxin, Haiguang, Loongson, Shenwei). The desktop operating system takes into account the user's existing Windows system operating habits, but also has a highly compatible Android operating environment, which can natively support Android applications. This also greatly expands the software and hardware ecology of Kirin OS.
Tongxin Software, established in 2019, has accelerated the research and development of UOS on the basis of integrating the new fulcrum of deep OS and ZTE, and the team has reached nearly 2,000 people. According to Yin Xin, commercial director of the ecological cooperation department of Tongxin Software Technology Co., Ltd., UOS has been able to replace the Microsoft Windows operating system, and there are still certain advantages in products with Win7. In terms of software and hardware ecological construction, at present, UOS has carried out extensive and in-depth cooperation with domestic CPU manufacturers such as Zhaoxin, Feiteng, Loongson, Shenwei, Haiguang, Huawei Kunpeng and so on, and has carried out a full range of compatibility adaptation work with domestic mainstream machine manufacturers and hundreds of software manufacturers.
In terms of domestic application software, Kingsoft's WPS is undoubtedly a representative domestic office software. According to the survey data of Jishi Information, with the focus on expanding customers in large industries and using personal customers for free, the market penetration rate of Kingsoft WPS Office products is 61.74%.
Although these domestic CPUs, memory chips, GPU graphics cards and other hardware and software operating systems still have a certain gap with foreign countries in terms of performance and experience, at least the localization of the PC supply chain has been able to be established. This is extremely important for the government and key industries to control the supply of equipment and information security autonomously. Moreover, with the continuous development of the domestic chip industry and the gradual maturity of the software ecology of the supporting system, the future localization of PCs is also expected to bring better experience to users.
Editor: Xin ZhiXun - Langke Sword