China is set to adopt a national wireless encryption standard in June despite Intel threatening to stop selling its wireless chip, Centrino. Under the policy, foreign wireless standards will be banned.
The US government wrote to Chinese officials asking the country not to enforce the ban but, so far, has been unsuccessful.
Although 25 per cent of laptops sold in China last year contained the chip, Intel is currently unable to provide a solution for the Chinese standard, WAPI (WLAN authentication and privacy infrastructure).
The Chinese government has given the encryption algorithm to 24 national companies, but under the policy, foreign manufacturers will be forced to collaborate with these firms to enter the market.
Experts believe that the move to block foreign wireless standards could be related to counter espionage. However, Intel's failure to support the standard could be due to the costs it would have to pay to the Chinese firms for accessing the algorithm.