China has issued a warning to domestic companies advising them against purchasing cybersecurity solutions from approximately a dozen US and Israeli companies, citing national security concerns, according to a Reuters report.
Israeli Cybersecurity Giant Affected#
The warning specifically targets major cybersecurity providers including Israel’s Check Point Software Technologies, as well as American firms Palo Alto Networks, Fortinet, and Broadcom. Following the news, Check Point’s share price dropped 2% in premarket trading.
The move represents a significant escalation in tensions between China and Israeli tech companies, particularly in the sensitive cybersecurity sector where concerns about data access and potential surveillance are paramount.
Limited Direct Impact Expected#
While the warning sounds significant, the actual business impact may be more limited than it appears. Check Point derives approximately 13% of its total revenue from the entire Asia-Pacific region, which includes not just China but also Australia, Japan, and other markets where operations will continue normally.
Furthermore, many Israeli cybersecurity companies have already chosen to limit their presence in the Chinese market. Most prefer maintaining relationships with US federal agencies, which prohibit any business contact with China. This strategic choice means the Israeli cybersecurity industry has relatively limited exposure to the Chinese market.
Context of Ongoing Tensions#
The warning comes amid broader tensions between China and Western cybersecurity firms. Israeli and American cybersecurity companies regularly publish research exposing Chinese state-linked hacking operations. Just last month, Check Point released a report documenting a Chinese-linked cyberattack on a European government office, while Palo Alto Networks published findings in September about Chinese cyberattacks targeting diplomats worldwide.
China’s domestic cybersecurity market is already dominated by local players, including 360 Security and Neusoft, which limits the overall market opportunity for foreign firms regardless of official policy.
The development adds another chapter to the complex relationship between Israeli technology companies and China, a topic that has generated increasing attention as geopolitical considerations shape business decisions in the tech sector.
Source: Globes
