U.S. media: technological cold war is paying a high price

The Wall Street Journal article on October 22, original title: the U.S.-China technology Cold War brings a high price The world is paying a high price for the technology Cold War between the two major powers, the United States and China. The U.S.-China conflict has upended the tech industry in both countries, disrupting large hardware manufacturers, chip design companies and even social media services. As Beijing’s and Washington’s actions reverberate through rural America, Europe and other corners of the world, the broader consequences are becoming clear.

Among the first to bear the brunt are the telecom and semiconductor industries. The Trump administration has kept leading Chinese companies out of the U.S. market and restricted U.S. exports to China. (In response) Several companies expect a total of billions of dollars in potential costs. U.S. chipmakers worry that losing sales to China would mean less money for research and development, making it harder to continue producing the cutting-edge chips that have made the U.S. a global leader in the semiconductor industry.

There is also a risk that the conflict will cause a slowdown in the spread of high-speed telecommunications access throughout Europe and rural areas of the United States. This could put European companies at an international competitive disadvantage in manufacturing, health care, transportation and many other industries that require 5G. Hundreds of thousands of homes and businesses in rural America face months or even years of delays in getting fast and reliable Internet access.

U.S. officials say the costs are worth it in the long run, and that other companies may also benefit from the hostile relationship between the U.S. and China. However, the damage could spread if the Chinese side (in response to U.S. provocations) escalates its actions and raises barriers to U.S. tech companies such as Apple and Qualcomm, which still see China as an important market. A look at the telecom and semiconductor industries gives a sense of the damage that the US-China tech Cold War has caused and could cause in the future.

The biggest victim so far has been Huawei. But the problem extends far beyond the company and will also have a significant impact on those companies in the U.S., Europe and Asia that design or manufacture the chips sold to Huawei. Huawei, for example, spends more than $11 billion a year on U.S. components. A senior U.S. official also acknowledged that U.S. suppliers would lose out. In Europe, large telecom operators will have to shift money and energy from expanding coverage and building 5G networks to replacing Huawei equipment already in use. European industry executives have been warning that Europe is lagging behind the United States and Asia in rolling out 5G networks, and that placing limits on Huawei would exacerbate the situation. Without 5G, European tech and manufacturing companies will fall behind in developing driverless cars, factories run by robots and more. In the U.S., about 50 rural telecom providers said it would cost a total of $1.8 billion to replace Huawei and ZTE’s equipment.

The U.S. semiconductor industry says U.S. companies are losing sales.In 2018, the U.S. semiconductor industry generated $226 billion in revenue and accounted for 48 percent of the global market. If U.S.-China tensions escalate and Washington bans chip exports to China altogether or Beijing drives U.S. companies out of its market, those figures would plummet to $143 billion and 30 percent. The result would be a shift in sales from U.S. chipmakers to foreign manufacturers, leading to less money for research and development – an area in which U.S. leaders aspire to global dominance because advanced chips are needed to maintain military and commercial technological superiority.

The U.S. actions so far could also indirectly drive away some business. Jack Parker, senior vice president of the U.S.-China Business Council, was told that a Japanese company is urging Chinese companies to switch to U.S. suppliers. The message was that it could not rely on U.S. technology and could be cut off in the future.