This informative and insightful Hinrich Foundation report published on 4 June 2020 dissects the intricate web of mutual dependencies and rivalries in cutting-edge technologies between the two Great Powers, how conflicts may intensify and how multinationals could navigate through choppy waters.
The following exerts give a glimpse of what the report is about -
"The China-US geopolitical competition has reached a tipping point and morphed into a new “cold war”, even as extensive trade and commercial ties continue on uncertain terms. In this report we look at why US-China decoupling in the tech sector is inevitable and implications for multinational companies."
"This is techno-nationalism on an unprecedented scale. Thus, as policymakers and business leaders outside of China contemplate this new reality, a new set of outcomes will emerge:
- Certain strategic value chains will decouple, restructure and diversify out of China.
- The US, EU and other state-actors will focus increasingly on countering Beijing’s economic nationalism with techno-nationalism initiatives of their own.
- Re-shoring and ring-fencing of some critical manufacturing will be unavoidable.
- New public-private partnerships, alliances and programs will need to emerge to compete with Chinese state and non-state actors.
- Multinationals will need to adjust to a world of increasingly fragmented and localized value chains.
- Businesses will have to adopt “in-China-for-China” business models if they wish to access the Chinese market."
Of particular note are the following titbits -
- Huawei claims 85,000 international tech patents. It is the world's biggest ICT patent holders in Europe, the top 50 patent holder in the United States, and the first in the world for patents related to 5G;
- America's top tech firms are highly dependent on revenue from the China market: Qualcomm - 65%; Broadcom, Micron, and Marvell Technologies - more than 50% and the rest - 20-40%.
- "Today, most innovations coming out of Silicon Valley cannot be manufactured unless they are made in China" (pages 10-11)
Download Hinrich Foundation-Strategic Technology Decoupling from China-Alex-Capri-08 June2020
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