Cybersecurity stocks fall after China software crackdown report

Investing.com -- Shares of several cybersecurity companies dipped on Wednesday after a Reuters report said Chinese authorities have instructed domestic firms to stop using security software from roughly a dozen companies based in the U.S. and Israel, citing national security concerns.

According to Reuters, the directive was circulated in recent days, though it was not immediately clear how many Chinese companies received it. The report said regulators are worried that foreign-made cybersecurity software could collect sensitive data and transmit it abroad.

The U.S. firms named in the report include Broadcom-owned VMware, Palo Alto Networks and Fortinet. Israel-based Check Point Software Technologies was also cited among those affected.

Palo Alto shares were down 2.5% by 05:04 ET, while Check Point slid around 1%. Fortinet also fell 2.7%, CyberArk lost 1.2%, while Broadcom edged 0.4% lower.

Per the report, Chinese authorities have raised concerns about the potential for foreign governments to access confidential information through Western security tools.

The move comes as tensions between Beijing and Washington remain elevated, particularly around technology and data security. China has been pushing to replace Western technology with domestic alternatives as part of a broader drive to reduce reliance on foreign suppliers.

While China’s efforts to build up its semiconductor and artificial intelligence industries have drawn the most attention, the country has also been working to substitute Western-made computer hardware and software across government and corporate systems.

Chinese analysts cited by Reuters have said concerns about potential foreign surveillance or hacking have increasingly shaped Beijing’s technology policy.

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