In a major blow to Chinese tech firms, the US Federal Communications Commission (FCC) has ordered a ban on the import of new models of foreign-made consumer wireless routers, citing national security risks.
The decision follows an assessment by an interagency panel that such devices could pose a threat.
The FCC said companies can apply for exemptions, but the move is expected to disrupt the router market, where most products are manufactured overseas.
Routers are used to connect wired internet lines and create Wi-Fi networks for devices such as computers, phones, televisions and cameras.
Impact of the ban
As per reports, existing approved router models can continue to be sold and imported. However, new models must be designed, developed and manufactured in the United States or risk being denied exemptions.
The move is expected to mainly affect Chinese brands such as TP-Link Systems Inc. and Huawei, and could push companies towards domestic production amid concerns over cyber espionage.
FCC Chair Brendan Carr said the measure is aimed at protecting homes, critical infrastructure and emergency services from foreign hackers.
Pressure on major router manufacturers
The action increases pressure on TP-Link Systems Inc., one of the world’s largest router makers.
Founded in China three decades ago and now headquartered in Irvine, California, the company is already under investigation by the administration of US President Donald Trump over concerns about its links to China.
Although the new rule does not name China directly but signals a clear direction in US policy on connected devices.
Industry effect
Other major router makers include Netgear Inc., Alphabet Inc.’s Google Nest, Amazon.com Inc.’s Eero, Cisco Systems Inc., Linksys and Asustek Computer Inc.. all of them manufacture their products overseas.
The ban applies regardless of where the company is based, even if it is headquartered in the United States.
Meanwhile, shares of Netgear rose as much as 16.7 per cent in after-hours trading, indicating investors expect the company to secure an exemption and benefit from reduced competition if TP-Link products are restricted.
TP-Link has previously said it is willing to engage with the US government to show its security practices meet industry standards and address any concerns.
The FCC said the order follows a White House determination that foreign-made routers create “supply chain vulnerabilities” that hackers and cyber spies could exploit.
The commission has updated its “covered list”, a blacklist of telecom equipment seen as posing unacceptable risks to US national security. It now includes all consumer-grade routers produced in foreign countries.
