War is about chips, not trade

The Asian Age - - Edit -

The ex­tra­or­di­nary ar­rest in Canada of the Chi­nese tech gi­ant Huawei’s CFO, daugh­ter of the founder Zhengfei, even as Don­ald Trump and Xi Jin­ping were sit­ting down for talks at the G- 20 in Ar­gentina had the global stock mar­kets trem­bling, the re­ver­ber­a­tions be­ing felt in Dalal Street too. While the bourses’ panic re­ac­tion may have been trig­gered by fears over the trade war re­sum­ing de­spite the 90- day truce de­clared at G- 20, the real story be­hind the ar­rest has more to do with a war over semi­con­duc­tor chips be­tween the US and China. The ac­cu­sa­tions against Ms Meng of Huawei are sim­i­lar to re­cent ones made against an­other Chi­nese tech gi­ant ZTE, the charges re­lat­ing to US sanc­tions against Iran. China is known to steer clear of the US as well as UN sanc­tions, but then front com­pa­nies are par for the course in skirt­ing sanc­tions in the shad­owy cor­po­rate world. The point is the charges ap­pear too flimsy for such dra­matic ac­tion.

At the heart of the move by the US ad­min­is­tra­tion — Pres­i­dent Trump was not briefed in ad­vance on the ar­rest, ac­cord­ing to re­ports — may be US na­tional se­cu­rity con­cerns as well as ac­tion to keep the US lead in­tact in the field of semi­con­duc­tors, which are the very foun­da­tion of the dig­i­tal econ­omy. Tech­no­log­i­cal su­pe­ri­or­ity in the mod­ern age will be de­fined by the power of com­puter chips, an area dom­i­nated tra­di­tion­ally by the US and al­lies Tai­wan and South Korea. Huawei may be seen as a threat as it is known to be in the game of in­dus­trial in­tel­li­gence or es­pi­onage with its global pres­ence. The tech bat­tle is all about ar­ti­fi­cial in­tel­li­gence and the power of com­put­ing and US ac­tion is to be seen in this light.

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