How Trump Is Threat­en­ing Global Tech and Tele­com

Dataquest - - EDIT - Ed Nair Group Edi­tor-ICT Busi­ness

The Trump ad­min­is­tra­tion in its lat­est move against global trade has China in its crosshairs. The move goes be­yond re­strict­ing Chi­nese im­ports; it has got more to do with stop­ping China’s ad­vances and in­flu­ence in tech­nol­ogy. Tech mag­a­zine Wired re­ports that China is try­ing to in­vent new forms of com­puter chips as part of its plan to lead the world in ar­ti­fi­cial in­tel­li­gence by 2030. The US is also try­ing to nix a takeover bid of an Amer­i­can tech com­pany, Qual­comm, by Sin­ga­pore-based Broad­com.

In the short term, how­ever, the sanc­tions plan poses a headache for US com­pa­nies re­liant on Chi­nese cir­cuit boards, servers, chips, or man­u­fac­tur­ing plants—and po­ten­tially their cus­tomers, too. The im­pli­ca­tions of this are be­gin­ning to be vis­i­ble in the high tech busi­ness. Wired re­ports that the ef­fects could be felt be­yond hardware com­pa­nies. For ex­am­ple, Chi­nese sup­pli­ers are im­por­tant to the Open Com­pute Pro­ject that internet com­pa­nies such as Face­book, Google, and Mi­crosoft sup­port to make servers and other data cen­ter equip­ment cheaper.

The New York Times (NYT) re­ported that the US Com­merce De­part­ment has blocked ZTE, a lead­ing Chi­nese tech­nol­ogy com­pany’s ac­cess to Amer­i­can-made com­po­nents un­til 2025. One of China’s lead­ing global tech­nol­ogy sup­pli­ers, with nearly $17 B in rev­enue em­ploy­ing 75000 peo­ple and op­er­at­ing in 160 coun­tries, ZTE is fac­ing the im­mi­nent threat of clo­sure.

ZTE’s prod­ucts for the in­fra­struc­ture of telecom­mu­ni­ca­tions net­works, as well as its smart­phones, use an ar­ray of Amer­i­can parts, like mi­cro­pro­ces­sors from the chip maker Qual­comm, glass made by Corn­ing and sound tech­nol­ogy from San Fran­cis­cobased Dolby, states the NYT ar­ti­cle.

The eco­nomic sanc­tion on ZTE has im­pli­ca­tions for the tele­com in­dus­try, not only for ZTE as an equip­ment ven­dor but also for its ser­vice provider cus­tomers. ZTE has laid thou­sands of miles of fiber op­tic cable in Ethiopia, and it re­cently signed an agree­ment with MTN of South Africa, a wire­less car­rier that serves 220 mil­lion peo­ple in 22 na­tions in Africa and the Mid­dle East, to test 5G.

How would China re­act to this? It looks like it will do ev­ery­thing pos­si­ble to man­age the short-term, but in the long-term, it would en­sure that it is not de­pen­dent on the US. Chris Lane, a tele­com an­a­lyst in Hong Kong with San­ford C. Bernstein, believes that China now has the re­solve to whip its semi­con­duc­tor in­dus­try into world-lead­ing shape, even if it takes a decade to do so.

We in In­dia have the good ex­pe­ri­ence of US sanc­tions. Our best for­ays in nu­clear sci­ence, space re­search, and su­per­com­put­ing were made on the face of US sanc­tions. China too would do the same, per­haps only faster. The US should un­der­stand that sanc­tions don don’t t work in a glob­ally in­te­grated world.

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