Chinese authorities are reportedly investigating the use of hardware from Broadcom Inc. (NASDAQ: AVGO) in state-backed data centers. The State-owned Assets Supervision and Administration Commission (Sasac) is evaluating the prevalence of Broadcom switches in state-controlled data centers as part of a campaign to boost domestic reliance on homegrown technology, according to a report by the Financial Times.
The investigation focuses on high-end switches, which are essential for transmitting large volumes of data at high speeds within data centers. Preliminary findings indicate that Broadcom switches could be present in up to 90% of state-owned companies, according to the report.
This high penetration rate might prompt Sasac to issue informal guidance to decrease the use of Broadcom switches in domestic data centers. The commission is also investigating whether Broadcom has exploited its market leader status to bundle other products or enforce large purchase requirements.
The alleged tactics are said to have limited Chinese firms such as H3C Technologies and Ruijie Networks from sourcing switches from other suppliers, including Huawei, the publication reported.
Broadcom did not immediately respond to a request for comments from Benzinga.
