Reports are coming out in all the major media that Intel has said that it has been unable to find a solution to meet China's June 1 requirement that all Wi-Fi equipment sold in China incorporate a locally designed data encryption technology to which only 24 Chinese companies have access.

Some media are claiming that Intel is intending to boycott the Chinese government's requirement, however, Intel appears to be playing down such rumors, instead citing technical concerns as the reason why it will stop selling the complete Centrino 802.11 chipset in China by June 1.

"We have been unable to find an appropriate solution that meets Intel's product quality standards that follows China's requirements," Intel spokeswoman Colleen Rubart told Reuters in Hong Kong. "Based on what we understand now, we would not be able to meet customer expectations for using wireless LAN (local area network) in China."

China is Intel's biggest market after the U.S., and the company is investing nearly $1 billion in two Chinese chip plants to demonstrate its commitment to the market. Despite spending $300 million promoting its Centrino chip package–which creates wireless Internet hookups and became the centerpiece of Intel's marketing efforts last year–Intel will have to stop selling the chipset in China in the face of government demands to alter the product to meet its new standards.

Intel spokesman Chuck Malloy says that Intel has already undertaken several months of technical work with the Chinese government to try and figure out a way to implement WAPI and will continue to do so, but he was unable to say when Intel will bring out products that support the specification. Despite its cooperation with the Chinese, Malloy does add that Intel disagrees in principle with the government's plans to break with the rest of the world. "We are concerned that by mandating a standard that is not compatible with international standards, China is taking an approach that has historically proven ineffective," Malloy said.