BEIJING: Chinese authorities have instructed domestic companies to stop using cybersecurity software produced by around a dozen firms from the United States and Israel, citing national security concerns, according to sources familiar with the matter.

The move comes amid rising trade and diplomatic tensions between China and the US, as both countries compete for technological dominance. In recent years, Beijing has stepped up efforts to replace Western technology with locally developed alternatives, particularly in sensitive sectors.

Among the US companies affected are Broadcom-owned VMware, Palo Alto Networks, and Fortinet, while Israel’s Check Point Software Technologies is also included, the sources said. They declined to be named due to the sensitivity of the issue.

Following the reports, shares of Broadcom and Palo Alto Networks fell more than 1 per cent in premarket trading, while Fortinet shares dropped nearly 3 per cent.

Chinese authorities are reportedly concerned that foreign-made cybersecurity software could collect and transmit sensitive data overseas. Chinese analysts have also warned that Western technology could be vulnerable to hacking or surveillance by foreign governments.

China has been steadily pushing state agencies and companies to replace foreign hardware and software, including computer equipment and word-processing tools. Major domestic cybersecurity firms include 360 Security Technology and Neusoft.

The development comes as Washington has slightly eased restrictions on US chip exports to China. On Tuesday, the US Commerce Department said it would allow Nvidia to sell its advanced H200 artificial intelligence chip to Chinese buyers on a case-by-case basis, provided certain conditions are met, including assurances of adequate supply for the US market. Sales of Nvidia’s most advanced processors, however, remain restricted.

Despite the policy shift, demand from Chinese firms remains uncertain. Beijing has reportedly been encouraging technology companies to prioritise domestically produced chips. According to media reports, Chinese regulators have told some companies that purchases of Nvidia’s H200 chips would only be approved in limited cases, such as for research labs or universities.

Last month, President Donald Trump announced an agreement with President Xi Jinping allowing Nvidia to export H200 chips to China, with the US government receiving a 25 per cent share of the sales.