If they must pick sides, tech firms will choose China

By Hu Weijia Source:Global Times Published: 2019/6/5 20:33:40

US President Donald Trump's latest confrontation with China's telecoms giant Huawei may plunge the world into a long-term technology "cold war," forcing global companies to pick sides between the US and China.

Jalal Bagherli, the boss of Britain's biggest independent microchip company Dialog Semiconductor, said in an interview with The Sunday Telegraph that the electronics industry would have no choice but to side with China against the US if the technology trade war escalates. 

Some foreign entities including the Institute of Electrical and Electronics Engineers (IEEE) changed their stand on Huawei after China announced last week it would create an "unreliable list" of foreign entities that adopt discriminatory measures against Chinese companies. It's quite impossible to mobilize all technology companies to isolate Huawei as the US expected. Although the US has world-class capabilities in technology, it has limited appeal to global entities. Some technology companies will decide not to side with Washington rather than be included on China's unreliable list.

In recent decades, China has established a series of complete industrial chains with foreign companies as an important component. 

As for electronics and chip companies, most of their suppliers and customers come from China. Dialog now makes chips that are embedded in products made by the US-based Apple, but many Apple products are assembled in China. "Everything is made in China, and in Asia," Bagherli said. Electronics and chip companies will be suffocated if they cut ties with China and the Asian supply chain.

It is still unclear what it means to be included on China's unreliable list, but it's clear that China will use its advantage in industrial chains to prepare for a counterattack. Companies that have forged close ties with China need to carefully evaluate the consequences of being included on the unreliable list.

China is moving quickly to push forward the implementation of its foreign investment law, adding to evidence that the country has the determination to further open up its economy. Foreign electronics and chip companies will be welcome to invest in China amid the technology trade war to further integrate these companies into the Asian supply chain. New measures to further open up China's economy will prompt more technology companies to stand on China's side amid the technology trade war.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn


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