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The Tech Cold War Has Begun
This is the moment Huawei Technologies Co. has been waiting for.
Chipmakers including Qualcomm Inc., Xilinx Inc. and Broadcom Inc. have told employees they won't supply to the Chinese electronics giant until further notice, Bloomberg News reported late Sunday in the U.S. Those companies will need clarification from the Trump administration on whether they can ship to Huawei, so for now it seems they're erring on the side of caution.
A similar process took place when ZTE Corp. was banned from buying U.S. products after reneging on a deal to settle charges of breaking trade sanctions. Staff were told to halt shipments until they could work out what was allowed and what was forbidden. The U.S. ended up imposing an embargo (later removed) that crippled the smaller Chinese communications company.
QuicktakeDigital Cold War
The prospect that the U.S. government would cut off the supply of components to Huawei was precisely what management had been anticipating for close to a year, Bloomberg News reported Friday. Huawei has at least three months of supplies stockpiled. That's not a lot, but it speaks to the seriousness with which the Shenzhen-based company took the threat.
There's hope that this latest escalation is just part of the U.S.'s trade-war posturing and will be resolved as part of broader negotiations. Huawei, or Chinese leaders, are unlikely to be so naive as to share that. Even the briefest of bans will be proof to them that China can no long rely on outsiders.
We can now expect China to redouble efforts to roll out a homegrown smartphone operating system, design its own chips, develop its own semiconductor technology (including design tools and manufacturing equipment), and implement its own technology standards. This can only accelerate the process of creating a digital iron curtain that separates the world into two distinct, mutually exclusive technological spheres.
Expect there to be hiccups. An initial Chinese version of Android - let's call it Chandroid - won't hold a candle to the original developed by Alphabet Inc.'s Google. Home-grown communications chips will be inferior to those offered by Qualcomm and Xilinx. But whereas past attempts to develop local products could flop because Western alternatives were still available, failure is no longer an option in the eyes of China's top leadership.
The government will pump in more subsidies to make sure the industry doesn't fall short, and much money will be wasted. Money can't solve all problems. But given time, Chinese state funding will overcome enough challenges to make local alternatives viable, if not comparable to American technology. It's unlikely the U.S. has the political will to subsidize its own companies to the same extent. Initially, it won't need to because of America's current superiority. But Huawei's position at the forefront of 5G mobile technology shows that this lead won't be held forever.
So now the tech cold war has begun. The winner won't be the side with the best fighters, but the one with the greater ability to endure the pain of prolonged losses.
[Source: By Tim Culpan, Bloomberg, NY, 20May19]
Economic, Social and Cultural Rights
|This document has been published on 13Jun19 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.|