Chinese officials directed the country's largest telecom carriers earlier this year to phase out foreign chips that are key to their networks by 2027, the Wall Street Journal reported on Friday, citing people familiar with the development.

The move would impact U.S. chip giants Intel and Advanced Micro Devices, according to the report. Their shares were down more than 1.5% in premarket trading.

Intel and AMD did not respond to Reuters requests for comment. Beijing has ramped up efforts to replace Western-made technology with domestic alternatives amid Sino-U.S. trade tensions, as Washington tightens curbs on high-tech exports to its rival, Reuters reported late last year.

State-owned enterprises were instructed in 2022 to replace office software systems with domestic products by 2027, the first time such specific deadlines were imposed, according to five brokerage firms that cited a September 2022 order from China's state asset regulator. Reuters could not independently verify the order.

China's Ministry of Industry and Information Technology ordered state-owned mobile operators to inspect their networks for non-Chinese semiconductors and map out timelines to replace them, the WSJ report said.

Beijing had introduced guidelines to phase out U.S. chips from Intel and AMD from government personal computers and servers, the Financial Times had reported in March.

China was Intel's largest market last year and was responsible for more than 27% of Intel's total revenue.

Procurements by Chinese telecom carriers show they are increasingly switching to domestic options. This has been made possible in part by the improved quality and stability of local chips, according to the WSJ report.

(Reporting by Akanksha Khushi and Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur and Pooja Desai)