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HONG KONG (BLOOMBERG) – In a crowded ballroom at the Beijing National Congress Center, the head of a large technology company has presented ambitious plans for the future of artificial intelligence in China. He explained how custom semiconductors would help power everything from autonomous cars to voice-controlled industrial machines.
Only this was not a state-supported enterprise. It was Intel Corp, the largest US chip maker.
The head of the company's AI, Mr. Naveen Rao, is committed to closely collaborating, "engineer to engineer," on advanced technology with the 7,000 people attending the annual conference of developers from Baidu Inc last week. Intel was the main sponsor of the event.
Rao has made no mention of the policy, although his overwhelming support for Baidu, a Chinese national technology champion, sends a powerful message: even as US and Chinese leaders struggle with a fierce battle for technological supremacy, companies like Intel remain big supporters of China. the technology industry because they depend on the country for their significant contributions to revenues, production lines and even talent.
Last year, Intel achieved 27% of its revenue in China, more than in the US or any other market, but it struggles to retain its customers, which it has grown for decades. Like many US multinationals with large companies in the country, Intel makes the distinction between keeping this lucrative market and keeping the good graces of Washington. Neutrality is becoming a more difficult position to maintain.
"There has been a psychotic break" between what some American executives want and American companies, said Josh Dorfman, founder of One Thousand Million, a Dallas-based China-based consulting and think-tank.
"Unlike China, US companies are not beholden to the country and are under no obligation to be patriotic – they want to make money."
An Intel spokesman said the company remained in contact with Chinese customers who were not on the US list of those it considered a security threat. China is a substantial market for Intel and it does not intend to withdraw now.
Intel is not alone. Apple Inc relies heavily on China not only for the manufacture of Mac computers and iPhones, but also for a consumer market, accounting for about 20% of sales.
Even as US President Donald Trump threatened to charge Apple products, the California company was planning to transfer production of its new Mac Pro computer to China, sending a clear signal of support.
While some companies plan to relocate some of their production out of the country, many others are doing goodwill gestures. Last week, Walmart Inc. committed to invest $ 1.2 billion ($ 1.63 billion) in China to modernize its logistics distribution centers.
Bloomberg News announced that Boeing Co is currently negotiating the sale of 100 airliners to Chinese airlines as part of one of its largest transactions. And last month, 600 US companies and business groups signed a letter to Mr. Trump to warn of negative repercussions on their business rates.
IBM Group Chairman for IBM Greater China, Liming Chen, said the escalating trade friction between China and the United States had created a "confusing environment" for companies.
He described the long relationship between IBM and China, which dates back to the introduction of its products in the country in the 1920s and the formal establishment of an office in Shanghai in 1936.
"IBM has been involved in China's rapid development over the past 40 years, while China has been feeding it," he wrote in an article published on WeChat in June, calling the country "a indispensable element of our global strategic map ".
The trade war between the United States and China is anchored in competition to dominate the next generation of wireless networks and other technologies as much as politics. The Trump administration fears that profit-seeking US companies can not really help the Chinese technology industry to overshadow US prowess in sensitive areas such as artificial intelligence and machine learning.
US Chief of Staff Joseph Dunford criticized Alphabet Inc. in March for Google's work on AI in China, saying it "indirectly benefits the military." Chinese ". Mr. Trump repeated the criticism in a tweet following, questioning the loyalty of Google's parent. Google said that it did not work with the Chinese army.
The same nationalist fervor is partly behind the ban, last May, of the Commerce Department to sell US components to the Chinese telecommunications giant, Huawei Technologies Co. Despite the recent promise of Mr. Trump to lift the restrictions, Huawei remains on the US list of entities and US companies must apply for special licenses sell parts to the company.
That did not stop chip maker Micron Technology Inc from feverishly trying to find ways to continue supplying the company, one of its biggest customers. The US semiconductor industry has also lobbied the Trump administration to ease restrictions on Huawei.
Nevertheless, US technology companies are facing a new global reality. They may no longer be able to neglect geopolitics in favor of profits. China may not be the savior of the growth that it once was.
Technology companies "now have to live in a world where their trading partners and global value chains could explode one day or the other," said James Lewis, director of the government's technology and public policy program. Center for Strategic and International Studies Washington Think Tank.
"Trump may have backed Huawei for the moment, but next week it could be something different and each of these companies is a fair game."
Lewis, who previously headed the US Department of Commerce for high tech trade-related national security and spy issues with China, said Chinese companies were also less reliant on very American companies that were striving to maintain their business.
The split of the two economies will not be easy. Research, development, manufacturing and talent in the United States and China are still largely interconnected.
"The innovation of US companies is fueled by access to the Chinese market," said Samm Sacks, head of cybersecurity policy and the Chinese digital economy at think tank New America, during of a testimony before the US Congress in May.
Collaboration with China enables Intel's head of Artificial Intelligence to design better products and quickly bring new technologies to market.
"I am proud of the strong and growing partnership between Intel and Baidu," Intel's Rao said in Beijing after hailing the developers with a warm "nihao". "By collaborating to advance AI, Baidu and Intel are helping to inaugurate a world where AI is ubiquitous."
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