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Dangerous security gaps: US government wants to ban the market leader's internet routers

NETGEAR share price jumps - USA considers ban on competitor TP-Link routers. $NTGR (-2,61%)

$FFIV (+1,05%)

Shares of NETGEAR Inc (NASDAQ:NTGR) shot up 17%, while F5 Networks, Inc (NASDAQ:FFIV) surged 6.6% in today's trading session. The move was triggered by Wall Street Journal reports that US authorities are scrutinizing Chinese company TP-Link due to national security concerns. The probe, which could potentially lead to a ban on TP-Link routers in the US, would be a boon for competitors such as NETGEAR and F5.


TP-Link, which holds a sizable 65% market share of residential and small business routers in the US, is the focus of intense scrutiny by the Departments of Commerce, Defense and Justice. The concerns stem from the fact that the company's routers have been linked to cyberattacks and have obvious security vulnerabilities. A Microsoft analysis in October found that a Chinese hacking group used a network of compromised TP-Link routers to launch cyberattacks on Western entities, including government organizations and defense contractors.


The potential ban on TP-Link routers would be the most far-reaching removal of Chinese telecommunications equipment from the US since the Trump administration's actions against Huawei Technologies in 2019. The Biden administration is also considering this move as part of a broader response to China-linked cyberattacks. Such a ban would shake TP-Link's market dominance, which had surged during the pandemic due to increased demand for reliable internet at home.


The Department of Justice is also investigating TP-Link for possible antitrust violations, as its routers are sold at significantly lower prices than its competitors, raising questions about attempts at monopolization. The TP-Link spokeswoman emphasized that the company is assessing security risks and fixing vulnerabilities. She expressed a willingness to demonstrate the company's security practices to the US government.


The potential restrictions on TP-Link have unintentionally brought the competitive offerings of American companies like NETGEAR and F5 to the forefront. As investors anticipate a potential shift in market share, today's stock movements reflect the potential for these companies to capture a larger share of the market should TP-Link products be banned.


It is important to emphasize that U.S. officials have not yet disclosed any evidence that TP-Link is intentionally acting as a conduit for Chinese state-sponsored cyberattacks. However, the ongoing investigation and increased scrutiny of supply chain security have obviously influenced investor sentiment, leading to today's jump in NETGEAR and F5 stock prices.


https://www.chip.de/news/US-Regierung-will-Internet-Router-des-Marktfuehrers-verbieten_185687163.html


https://de.investing.com/news/stock-market-news/netgearaktie-springt-an--usa-verbot-von-konkurrent-tplinkroutern-erwagen-93CH-2817640

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