https://theconversation.com/whats-at-stake-in-trumps-war-on-huawei-control-of-the-global-computer-chip-industry-124079
> Silicon Valley may now be more popularly associated with software companies > such as Google and Facebook but it takes its name from the material most used > to make semiconductors. > > Semiconductors – or computer chips – power everything from mobile phones to > military systems. The semiconductor industry sits at the centre of the modern > world. > > This point is key to appreciating what’s going on in the US government’s > battle with Chinese technology giant Huawei. > > The US actions do more than just keep Chinese technology away from critical > telecommunications infrastructure – something it has lobbied US allies to > emulate. > > Read more: Explainer: why Chinese telecoms participating in Australia's 5G > network could be a problem > > They also choke off the global supply of semiconductors, and technology to > make semiconductors, to Huawei, thereby limiting China’s rate of > technological progress, economic development and ability to compete with the > US. > > Executive ban > > In May US president Donald Trump signed an executive order blocking US > technology companies dealing with Huawei. The order bans “any acquisition, > importation, transfer, installation, dealing in, or use of any information > and communications technology or service” without special approval. > > Among the effects is that Google has stopped licensing its Android mobile > operating system to Huawei, limiting the Chinese company’s ambitions in the > global phone market. > > But arguably the biggest consequence is blocking the sale of US > semiconductors, and semiconductor-making equipment and services. > > Huawei is not only the world’s third-largest buyer of semiconductors but, > through its subsidiary HiSilicon, one of China’s biggest semiconductor > makers. Being shut off from US suppliers impedes both the competitiveness of > its products and the development of its own chip-making capacity. > > A coherent strategy > > The US Semiconductor Industry Association has urged the US government to > approve exemptions because there are no “national security concerns” in > selling semiconductors to Huawei for “non-sensitive” products such as phones. > It argues the ban only benefits foreign rivals. > > But my research, based on financial data from Bloomberg, points to a coherent > strategy to preserve US dominance of the global semiconductor industry. > > US corporations dominate the global semiconductor industry. The following > chart shows the world’s top 20 manufacturers by company value. > > > Author provided > Despite all the hype about the rise of China, Chinese involvement in computer > and electronics technologies is still typically restricted to lower-end > activities such as making and assembling components. US companies take the > lion’s share of profits through controlling the intellectual property in > design, branding and marketing of electronic goods. > > Apple Corporation, for example, subcontracts Taiwanese company Hon Hai > Precision Industry to assemble its products. Hon Hai in turn employs up to a > million Chinese workers through subsidiary Foxconn, which makes products for > Apple along with other brands. In 2013 Hon Hai’s profit was US$2.6 billion. > Apple made US$33 billion – almost 13 times more. > > > Chinese workers at Foxconn’s Lunghua plant in the Chinese city of Shenzhen, > Guangdong province. Foxconn is the world’s largest manufacturer of electronic > components. YM Yik/EPA > Based on everything Trump has said about China, this is the way he would like > to keep things. > > China wants to become a global semiconductor player but lags far behind US > corporations in size and sophistication. It continues to rely heavily on > semiconductor imports. It spends more on importing semiconductors than on oil. > > HiSilicon, like other Chinese companies, lacks the manufacturing experience > to produce advanced semiconductors at scale. For basic chip design it has > relied on British semiconductor design company Arm (owned by Japan’s > Softbank). Arm cut ties with Huawei in May to comply with US restrictions. > > Finding a replacement for Arm won’t be easy. Most of the other big providers > of equipment, software and services for designing and making semiconductors > are American – such as Cadence Design Systems, Synopsys, Applied Materials > and Lam Research. > > Long-term prize > > Blacklisting Huawei on national security grounds can therefore be seen as a > way to hinder China’s semiconductor industry. It help keeps China in a > subordinate position as an assembly area for US corporations. > > Trump’s Huawei strategy looks more coherent than many other parts of his > international agenda. The ban may also be hurting US companies, but the > longer-term prize is maintaining the hegemony of US companies in a vital > industry and keeping the American state in front of its geopolitical rival. > > It appears we may be at the start of a new cold war that will play out across > technology industries – from the global semiconductor industry to 5G > networks, exascale computing, artificial intelligence, autonomous vehicles, > robotics and gene editing. > > Read more: Huawei is a test case for Australia in balancing the risks and > rewards of Chinese tech > > These are battlefields on which the Trump administration has already > signalled it wants its allies to join it. > > This potentially complicates the desire of a country like Australia, which > wants good relationships with both the US and China, its most significant > trading partner. Decisions such as blocking Huawei from tendering for > contracts for Australia’s 5G network could well be seen as evidence we are > far from neutral, instead being a deeply and willingly integrated part of the > US empire. -- Kim Holburn IT Network & Security Consultant T: +61 2 61402408 M: +61 404072753 mailto:k...@holburn.net aim://kimholburn skype://kholburn - PGP Public Key on request _______________________________________________ Link mailing list Link@mailman.anu.edu.au http://mailman.anu.edu.au/mailman/listinfo/link
