What's at Stake in Trump's War on Huawei: Control of the Global Computer-Chip Industry

What's at Stake in Trump's War on Huawei: Control of the Global Computer-Chip Industry

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 U.S. government’s battle with Chinese technology giant Huawei.


The U.S. actions do more than just keep Chinese technology away from critical telecommunications infrastructure – something it has lobbied U.S. allies to emulate.


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 U.S.


Executive Ban


In May U.S. President Donald Trump signed an executive order blocking U.S. 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 U.S. 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 U.S. suppliers impedes both the competitiveness of its products and the development of its own chip-making capacity.


A Coherent Strategy


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