Despite China's marketing of having a technological empire in Shenzhen, the electronic capital, technical industries are still dependent on American, Taiwanese, South Korean and Japanese suppliers to obtain chips and many key components, which makes China a technology hero made of paper that is vulnerable to counterattacks from Washington.
Beijing - It is reported that the Chinese empire is easier than a spider's web, as US sanctions have weakened Chinese companies and forced them in many cases to sell their assets and obstructed the goals of the fifth generation, which reflects the weakness and fragility of these technologies that were not helped by their arrogance in repelling the US ban. for years.
Shenzhen, with a population of nearly 12 million in southeast China, is the consumer electronics capital of the world. By some counts, it has now surpassed its turbulent regional rival, Hong Kong, in terms of population, skyscrapers, and even gross domestic product. It is also home to the Chinese telecommunications company Huawei which dominates the 5G wireless infrastructure, which is considered the core of the technology war between the US and China.
Shengen has long been a center for assembling cellphones, and is about to enter the handset business itself," Salvatore Paponis, a foreign policy writer and research assistant at the Center for Independent Studies in Sydney, wrote in a report. In November, a group led by the Shenzhen municipal government struck a deal including $15 billion for Huawei and the acquisition of the Honor series of smartphones.
The company has been struggling since the start of the ban imposed by the US Department of Commerce on its sales and its inclusion in the black list of exporters.
The strange scene lies in the city government's decision to transfer money to a global technology giant that is symbolic of China's problems in developing its own technologies.
China is ambitious and can raise funds when necessary from unlikely sources. But it lacks the broad ecosystem of commercial collaboration, intellectual property protection, and smart investment capital that makes deep technological cooperation possible.
The fact that the US government was able to block the world's largest smartphone maker and 5G infrastructure supplier in less than a year is an indication of the fragility of China's technology sector. China's electronics industry relies on American, Taiwanese, South Korean and Japanese suppliers for many key components.
Microprocessors are among the most strategically important technologies. Despite years of strategic investment, China has not yet been able to master its production.
Silicon-based semiconductors are used in all kinds of computer chips, including memory chips and a variety of other microprocessor chips.
Most readers are still familiar with the general-purpose microprocessors, known as CPUs, that power smartphones and computer systems, but device performance is increasingly dependent on more specialized microprocessors such as GPUs and AI accelerators.
The most advanced CPUs on the market, such as the Apple A14 Bionic, the Qualcomm Snapdragon 888 processor and the Samsung Exynos 1080 chipset, include integrated GPUs and on-chip AI accelerators with 5G wireless integration.
The only serious Chinese competitor to these advanced US chips is the Hisilicon Kirin 9000, which was designed by an in-house subsidiary of Huawei.
Until this year, Huawei's Hisilicon chips were manufactured by Taiwan Semiconductor Industry Co., Ltd. But the tightening of US sanctions put an end to that.
Broader US export controls have narrowed the Chinese company's opportunities to develop advanced manufacturing capacity of its own. As a result, Kirin 9000 is born dead.
The International Semiconductor Manufacturing Corporation is the most advanced in China, headquartered in Shanghai. Like Huawei, the corporation is listed by the US Department of Commerce and Defense, which restricts its access to US technology and financing. Without foreign help, the International Semiconductor Manufacturing Corporation would not be able to produce a chip like the Kirin 9000. Like all major CPUs today, the Kirin 9000 is designed for 5nm silicon chips.
When it comes to semiconductors, smaller is better, and the International Semiconductor Manufacturing Organization stuck to 14nm. It has announced plans to produce 7nm chips, but lacks the tools to manufacture them.
If China is unable to match its international competitors on microprocessors, it is not for lack of trying or spending. It set up a $22 billion National Integrated Circuit Industry Investment Fund in 2014 to try to reduce its dependence on imported chips, but to no avail.
Today, 16 percent of semiconductor manufacturing is made in China, which is the least developed in every category. And last year, China announced a second major fund to invest another $29 billion in semiconductor development. It remains to be seen whether China can succeed in this in the face of US sanctions.
For all the promised investment, China's chipmakers and designers are short of cash. It is not surprising that Huawei would be within the reach of the Schengen government, given its significant exposure to the US and Indian markets.
But other Chinese chipmakers with little to no connection to the US are also facing financial difficulties. Hongxin Semiconductor Manufacturing in Wuhan promised to build China's first 7nm chip, but money ran out in August. Since then, it has been taken over by the municipal county government in an effective salvage operation.
In September, Yangtze Memory Technologies, a maker of memory chips for mobile devices, headquartered in the virus-hit city of Wuhan, announced plans to manufacture chips worth $22 billion.
Two months later, parent company Tsinghua Unigroup defaulted on a $198 million bond payment. In addition to the stalled project, Tsinghua Unigroup owns a chip design company and a cloud computing platform, among others. It was believed to be politically immune from failure because of its association with the prestigious Tsinghua University.
However, it is not the first university-related company to default on its debt. Peking University's group of institutions defaulted on a bond last December, even before the coronavirus crisis. And if China is allowing such companies and university research groups to fail, the country's financial conditions must be much worse than its announcements of multi-billion dollar investment funds would suggest. Even the governor of the People's Bank of China, Yi Gang, felt compelled to publicly warn local governments this week. Past bad business decisions, such as acquiring distressed companies or companies with uncertain futures.
China has made the chip industry one of its top technology priorities in the past decade, but it hasn't made much progress. Even before many of its flagship companies were exposed to US controls, China had proven unable to establish a competitive market presence for simple memory chips and complex microprocessors. And with the latest chip designs incorporating CPUs, GPUs, and AI accelerators, China will find it harder to catch up.
In another context, research indicates that if Washington takes more action against Chinese technology companies, Beijing should respond by imposing more restrictions on American technology companies in China.
US brands will be vulnerable to a boycott by the Chinese consumer, as Chinese companies' concerns about banning US computer chip sales have intensified Chinese efforts to achieve self-sufficiency in key technologies.
In all of this, the major European countries and companies will want to remain neutral in the emerging cold war between the United States and China, but will they be able to do so? Even the United Kingdom's decision to open the fifth generation communications market to Huawei did not last long, and it turned out to be impossible.
After crippling Huawei and cannibalizing ByteDance's global business, the US has now turned its sights to a third Chinese tech giant, Tencent.
Tencent has removed Facebook from the top of the largest social networking platforms in the world by market value. Its market value jumped to $670 billion. The Chinese internet giant still has opportunities for its market capitalization to rise.
According to the report, Tencent is dubbed the “global mobile game powerhouse”, as it includes under its umbrella a wide range of games that number more than 480 games, in addition to a number of social platforms, including the well-known WeChat application. The company is also known for its music videos and cloud computing applications.
While the founder and chairman of the company, Pony Ma Huateng, is ranked as the richest person in China, and is ranked No. 20 in the world in the Bloomberg Index with a fortune of more than $52 billion, to precede Jack Ma, the founder of Alibaba, whose fortune is estimated at $50.5 billion.
The competition between American and Chinese Internet companies is intensifying during this period, which was evident two weeks ago in the displacement of the Alibaba e-commerce company, Facebook, from the sixth largest company in the world in terms of market value, after the value of the Chinese giant reached $ 673 billion. .
Chinese companies are benefiting from domestic economic growth and a stronger GDP, while enjoying greater opportunities to open up to more emerging markets in Asia and Africa.
Banning Tencent, and WeChat, which is used by one billion Chinese, will have a huge impact not only on the second largest Chinese technology company by value, but also on large sectors of American companies.
The executive order signed by Donald Trump was vague and did not indicate how severe the penalties would be? But it was negative enough to remove tens of billions of dollars from the share prices of Tencent and Apple, which did not respond to a request for comment.
If there is a strict interpretation, it could force Apple and Google to remove WeChat from their App Store, a move that will inevitably dampen iPhone sales in China, and thus the app's popularity.
American companies such as Wal-Mart, Cook, and Nike that rely on WeChat to market and sell their goods will also be affected. Especially since the app has replaced email in China, as one of the two major smartphone payment methods that are increasingly cash-free for shopping.
The number of WeChat users in the United States is about three million active users per month alone, most of whom are Chinese expatriates and Chinese students studying in American universities, for whom the application is a valuable way to stay in touch with their families and friends in the home country.
But the biggest concern is the restrictions on its offshore subsidiary's business, which is preventing it from purchasing US servers or chips for use in its WeChat business.
Almost all analyzes indicate that there is no winner in this loss-sharing case.
The current conflict is primarily a political and security conflict. As long as the United States, along with the European Union, do not trust the communist regime in Beijing, there will remain concern about Beijing using American and European companies to collect data on users, shape media content, and interfere with basic infrastructure.
