Roundup: The US’s war on Chinese tech has consequences

The continued restrictions being placed on China and Chinese tech companies by the United States has been a story for several years — and one that will continue to see further developments once Trump retakes the White House. Earlier this week, the US put new restrictions on China’s ability to access advanced semiconductors, prompting the Chinese government to respond with further export controls on key minerals for their production.

But what is the impact of this broader battle? I read a couple interesting stories on that this week I thought I’d share.

The first comes from Ryan McMorrow and Eleanor Olcott at the Financial Times [archive] who looked at China’s escalating efforts to shift to local chips in response to expanding US restrictions. Government-backed industry associations have explicitly told companies to get off US chips, placing even greater pressure on the local chip industry to catch up with what US, Taiwanese, and other non-Chinese companies can do. That could have huge consequences.

Analysts at Bernstein estimate Chinese groups have the power to influence sourcing decisions for the roughly 40 per cent of the global smartphone market they control and the 23 per cent of the computer market supplied by companies that include the world’s largest PC maker Lenovo.

Customers in China, for example, contributed 27 per cent of sales last year for Intel, America’s stumbling traditional chip champion. Artificial intelligence chip giant Nvidia drew 17 per cent of sales from the country. Arizona-based Onsemi estimates its chips are in half of China’s electric vehicles. Mobile processor maker Qualcomm derived about half of its $39bn in annual revenue from China.

The second story comes from Yuan Gao, Nguyen Xuan Quynh, Ram Anand, and Andy Lin at Bloomberg [archive], who dug into the effects elsewhere in Southeast Asia from the push to bifurcate tech supply chains: to have one for the United States and another for the rest of the world. They explain how major tech companies’ need to have an insurance policy against further crackdowns on China have led to major investments in places like Malaysia and Vietnam, creating tons of new jobs and expectations the countries are sometimes struggling to keep up with.

Washington’s clampdown on Beijing’s tech ambitions drove companies to explore production in places as close as Mexico and as far as Southeast Asia, enriching countries where labor is abundant and governments are supportive. […]

“Malaysia sees this as a once-in-a-lifetime opportunity of escaping the middle income trap and soon achieving its aspirations as a high income nation,” Chow Kon Yeow, the chief minister of Malaysia’s Penang state, told Bloomberg.

Labeled an upper middle income nation by the World Bank, with the highest GDP per capita in Southeast Asia by a wide margin after Singapore and Brunei, Malaysia accounts for 13% of the world’s share of chip testing, packaging and assembly. It is now expanding its chip manufacturing capacity.

In the roundup this week, find great reads on why China is now key to addressing the climate crisis, how moderators are failing to contain the joy at the murder of a health insurance executive, and what happened at Intel.

I spoke to The Ringer this week about those bright LED headlights far too many vehicles have and went on DW News in Germany to talk about the tech oligarchy increasingly ruling the United States. Over on Tech Won’t Save Us, I spoke to Cam Wilson about Australia’s plan to ban under-16s from social media and whether it really makes sense.

Have a great week!

— Paris