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The Trump administration has broadened its target this week by banning Chinese companies from selling to the United States or buying components from US companies to slow China's technological progress.
After crippling Huawei, China's largest telecommunications company, the administration has threatened to cut US components or software from five Chinese CCTV companies. But the plan could turn against us because US companies are so inextricably involved in the global technology supply chain.
Concerns over Washington's punitive measures and possible retaliation by the Chinese shook the markets all week, pounding chip makers and Apple. This is the 5G that embodies most of Washington's fears: by adopting a multitude of future technologies, from autonomous cars to advanced medical procedures, the new wireless standard is becoming the backbone of the modern economy. .
Until recently, it appeared that Huawei, the world's largest provider of communications network equipment and the second largest smartphone manufacturer, provided this infrastructure. By removing the Chinese technology giant, the United States would only slow down the expansion of 5G. This is bad news for some of the largest US companies, including component manufacturers, who are expecting a strong increase in orders from this year.
Without the Chinese 5G network, consumers will not buy new phones containing chips from Qualcomm and Micron Technology. They will not generate data that must be overwritten by processors manufactured by Intel, Nvidia and Advanced Micro Devices. And you will not need any faster network equipment, powered by Broadcom and Xilinx chips.
"I do not think it's good for the US economy," said Minyuan Zhao, badociate professor of management at the Wharton School of the University of Pennsylvania. "With their strong institutions, the United States has long been a strong force in the global supply chain. People do not always trust China, but they see the United States as a trusted partner, if not a guardian of the global economic system. "
If supply chains can be interrupted arbitrarily and confidence disappears, countries will begin to implement individual systems and the result will be lower and more expensive.
Made in China Policy
Washington's efforts to contain the world's second-largest economy accelerated about three years ago when Beijing first codified its vast ambition to take the lead in future technologies through its Made in China 2025 industrial policy.
Associated with a formal plan to dominate artificial intelligence by 2030, they showed the country's willingness to invest billions of dollars in scientific research – a goal that frightened Washington bureaucrats who feared that private American companies and the army would be left behind.
Nevertheless, Chinese technology companies remain far behind their US counterparts in some key sectors. The country is still importing more semiconductors than oil and no Chinese company has yet caught up with Google or Microsoft in software. The American technology of Huawei and his peers is thus threatened by the threat.
In other areas, however, they are progressing rapidly. Huawei is already the largest provider of 4G networks and its equipment is essential for the deployment of 5G networks in China, the largest smartphone market that will connect to them. American companies have every reason to tap into this pool, which has hundreds of millions of subscribers.
Well-funded Chinese companies, from Alibaba to Tencent, and startups like SenseTime, fill the gap in artificial intelligence with an unparalleled mine of user information, as Western rivals are concerned about the protection of life private afraid to never match. Even mainstream Internet companies such as Tencent and Ant Financial Services Group are leading the way in social media and mobile payments innovation.
Companies such as General Electric, Alphabet and Microsoft are concerned that Washington's proposed export controls on technologies considered critical to competitiveness may actually prevent them from competing in lucrative markets, while reducing capacity. United States.
In a written submission to the Commerce Department, Microsoft warned that the proposed restrictions could isolate the United States from international research collaborations and "could harm the interests of the United States."
"Artificial intelligence is a very broad concept," warned GE in its own submission. Export controls defined too broadly could cover areas such as medical imaging, where algorithms are used to detect diseases and in toys, he added.
The crackdown on Huawei and other technology companies has been widespread since the US-China trade war that has been going on for months. Trump has targeted technology companies, suspected of being helped by Chinese companies to help Beijing spy on foreign governments and steal intellectual property in the United States. It's risky. "The more we continuously badociate the economic war and the interests of national security, the more we start to think of everything as national security," said Evanna Hu, CEO of Omelas, a Washington-based security software company. . "When you have a hammer, everything looks like a nail."
Until now, US chip makers have probably suffered the most from Washington's actions. Intel, Qualcomm, Xilinx and Broadcom have announced that they will cut supplies to Huawei until further notice, according to sources close to their actions. While their Huawei hamstring move, it also means that businesses will lose revenue.
China has threatened to retaliate. "This is bad behavior, so there will be a necessary response," said Zhang Ming, Chinese envoy to the EU, in an interview in Brussels. Such an initiative could be devastating for Apple.
According to badysts, the rise of pro-Huawei nationalist sentiment could make Apple's already troubled trade in China more difficult, hamper iPhone sales and disrupt the company's supply chain. Analysts at Goldman Sachs believe this week that Apple could lose nearly a third of its profit if China reacted by banning its products. But so far, there is no indication that China plans to do so.
Dan Ives, an badyst at Wedbush Securities, said that 3 to 5 percent of iPhone sales in China could disappear in the next 12 to 18 months due to the US ban on Huawei.
While global markets have begun to imagine a new era of cold war between China and the United States, President Donald Trump said on Thursday that Huawei could "be included in a type of trade deal" with China , without providing details. The president also added that "Huawei is something very dangerous. You look at what they did from a security point of view, from the military point of view, it's very dangerous. "
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