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HEADLINE: US-China Train Wreck
This is Brian Santo, EE Times Editor in Chief. You're listening to EETimes on Air.
我是EE Times主编Brian Santo。你正在收听的是EETimes全球联播。
Today is Friday, May 24th, and this is your EE Times Weekly Briefing.
The biggest story in electronics this week affects almost everyone in the high-tech industry-- from Huawei to Google to Infineon to chip companies, circuit board suppliers-- essentially the entire supply chain. The Trump Administration this week took steps that will certainly isolate Huawei and possibly cripple it.
What was once delicately framed as a “trade tension” between the two nations has officially turned into an all-out-trade war, affecting not just the electronics industry, but nearly every other commercial segment around the world – from farming to aeronautics.
This past week EE Times launched a Special Project that zeroed in on damage done during the trade conflict already. We've been reporting on all aspects of the fast-evolving situation – seen, reported and analyzed through the lenses of our reporters scattered all over the world.
We are dedicating this week’s entire show to dissecting the outbreak of U.S.-China trade warfare.
First, Junko Yoshida, EE Times chief international correspondent, explains the genesis and contour of the EE Times’ Special Project on the topic. She discusses how the situation escalated far more quickly than most people anticipated even as recently as last week.
首先，请EE Times首席国际通讯员Junko Yoshida解释EE Times专题报道项目的来龙去脉。她将讨论过去一周事态发展如何快速发酵升级，超出大多数人的预期。
Two weeks ago, as EE Times’ editors started to plan our emergency Special Project on this escalating U.S.-China trade war, we felt a little ambushed. This was a development we didn’t see coming. Seriously.
US-China trade negotiations over 25 percent tariffs have been dragging on for months. To us mere reporters, the clash seemed routine — the standard exchange of verbal threats between the world’s two largest nations, punctuated by empty bluster and the occasional tantrum.
Then, boom! The war of rhetoric turned into a train wreck.
First, the U.S. President issued an executive order on grounds of national security. The U.S. Commerce Department quickly followed by putting Huawei and other Chinese companies on what they call “Entity List.” In plain English, that’s a blacklist. The government now bans tech companies from supplying parts and components to the blacklisted Chinese companies including Huawei, unless they first seek approval from the U.S. authorities.
To complicate matters further, this is no longer just tit-for-tat between the United States and China. It involves the entire global economy.
It isn’t just U.S. companies who now have to obtain an export license from Uncle Sam when trading with the blacklisted Chinese. Non-US companies, too, must comply, according to U.S. trade lawyers… although many details are still fuzzy here, as I expect a lot of lobbyists must be heavily working on this in the background.
But here’s the thing. Unfolding now is a “decoupling” of trade between the world’s two largest economies, as George Leopold, EE Times contributing editor, wrote this week.
The world is now officially split in two. The Trump administration, acting largely by fiat, is demanding that companies in Europe, Asia and elsewhere take a stand: “Are you with us, or not?"
In our Special Project, Barbara Jorgensen, my colleague, managing editor of EPSNews, summed it up: “Procurement costs have increased; partnerships have been severed; and companies have been forced to relocate manufacturing. Global procurement operations are shifting away from China-reliant suppliers.”
Clearly, this controversy is turning the supply chain upside down.
So how much worse can it get? Much worse, says economist Dieter Ernst, whom we interviewed earlier this week.
“The damage done by this outbreak of open technology warfare is likely to be much more serious and long-lasting than normally assumed in the media,” he told us.
The biggest damage done, in my mind though, is the fear that the U.S. government has successfully instilled not just among American people and companies, but everywhere in the so-called free market.
We ask corporations in the US or Europe about export controls imposed by the U.S. Commerce Department. They offer no comment. “There is nothing we can say at this point,” said an EDA company spokesman.
The same goes for Chinese companies. As we were planning on a feature story on a Chinese startup, the company came back and told us it doesn’t want an unnecessary spotlight on itself in the United States right now, because its technologies fall into the Information and Communication Technology category.
Mutual distrust, sometimes open hostility, being mum on policy matters and restricting the exchange of ideas, people and technologies — these are all powerful indications that we are now fighting an undeclared 21st Century economic Cold War.
In the words of Bette Davis: “Fasten your seatbelts, it's going to be a bumpy night.”
This is Junko Yoshida, Chief International Correspondent of EETimes.
Next up, Bolaji Ojo sat down with George Leopold, EE Times contributing managing editor, to get the view from Washington, where George is based.
So you are right in the middle of all the Executive Orders flying all over the place. And I've seen your write-up on these. What's the take from Washington on this new Executive Order that's impacting the technology industry so much?
Well, it looks like we've reached a crossroads in terms of trade with China, and there are some within the administration that, it looks like they want to sever trade ties China. And of course this is after four years of economic integration starting with Deng Xiaoping. Whether that's going to happen remains to be seen. It would be a very hard thing to do. You understand how the electronics supply chain works, and China's fundamental to that. And we've done some reporting on that. Maybe some companies will develop work-arounds to what the Trump guys want to do in terms of trade with China.
One thing that I kind of thought about while I was reading some of the articles that EETimes has published recently, and I meant to ask you this. Did anybody in the tech industry contribute to drafting this Executive Order? Did the Trump administration talk with folks in the industry to kind of get their input, or is this just something done by politicians?
The input I was getting was, there seems to be-- as one source described it to me-- a near consensus in Washington that the industry's pretty fed up with the way they're being treated by the Chinese. You have the intellectual property issues and so forth.
And I was told that last week there was a consensus hearing in the Senate committee that has jurisdiction over trade that we're pretty much getting to the point where we're telling our allies, You're going to have to pick between us and the Chinese. Which is a pretty severe step. And I think that sort of goes to our thesis that maybe we're seeing the beginning of a trade Cold War between the United States and China.
So these stories have been going around for a long time about how China wants technology in exchange to access to their market. And maybe these sort of strong-arm tactics are catching up with them.
On the other hand, you got a lot of hard-line people within the administration who don't have a lot of experience in China and I don't think really understand the dynamic of trade between the two countries. And the fact that globalism I think is a reality.
So push has come to shove it appears. And nobody knows how it's going to unfold.
One thing I can tell you is this: When you back even a goat into a corner, it begins to fight back. So I think maybe one of the things that we may not have totally thought about is the long-term implications from the Chinese on all of these. Maybe they will eventually capitulate and do whatever we want, but over the next five, ten, fifteen years, isn't it likely that a much more going to develop tiny technologies that may leave American companies without access to their market?
Yeah. And it looks like the prime example now is what's happening with Google and android. I guess there's been a delay in implementing it. But if Huawei can't get ahold of the software required for android updates, then they're probably going to have to roll up their sleeves and do it themselves. And this works both ways. It could be that American suppliers will develop work-arounds in the supply chain if they have trouble getting components from the Chinese.
So yeah, you're going to see a lot of people reacting. For some it will be an opportunity, and for others who knows? Maybe they won't last.
Do we have the likelihood of two track technology systems developing as a result of this?
I think it's going to be ultimately pretty hard to do that. As I said, four years of economic integration; the Chinese are central to the global electronics supply chain. So maybe this gets resolved at some point before everybody jumps off the cliff. We'll see.
I hope it gets clear up. But whatever happens, EETimes will be here. And I will be looking forward to your input from Washington, DC. George, it's great talking with you again.
Okay, Bola. Good to talk with you.
Nitin Dahad, our London correspondent, happens to be in Taipei this week. Nitin just filed a hot story on an internal memo that Arm circulated. In the memo, Arm asked its employees to stop working with Huawei. Here’s Nitin explaining how European tech companies are responding to the latest dictum from the US Commerce Department.
This week, as I arrived in Taipei to judge the D&I awards ahead of the Computex trade fair, there have been plenty of developments in US-China tech trade war within a space of just 48 hours.
From a European viewpoint, the big news is that Arm has dealt the biggest blow yet to Huawei, and that’s after rumors of Infineon halting supplies to Huawei, which were denied 24 hours after that news broke, and European semiconductor stocks falling.
Wow, things are moving fast.
So first, what’s up with Arm?
Well, it has issued a company-wide memo instructing all employees to halt all activities with Huawei. More specifically, it said that staff must stop “all active contracts, support entitlements, and any pending engagements” with Huawei and its subsidiaries to comply with the US trade clampdown on Huawei.
This is a huge blow to Huawei, especially since Arm features in some of its latest chips like the Kunpeng 920. And Huawei is also building a 400-person development center near Arm’s headquarters in Cambridge, UK.
The Arm memo was more than just a polite ‘please stop business’ note. It actually went further, saying employees must conform or face the consequences.
This appears to be an unprecedented internal edict by a key industry player. Okay yes, Google did issue its statement saying it won’t now be supporting Android on Huawei handsets, though they got a three-month reprieve for Huawei on that.
But Arm was explicit about the consequences. It said staff that came into contact with Huawei employees at industry events must decline and stop any conversations about the business or be held personally liable for breaking the trade rules.
Elsewhere, the US-Huawei roller coaster seemed to give Huawei a slight reprieve as Infineon denied supposedly reliable reports in Japan suggesting that Infineon had halted supplies to Huawei to conform with the trade rules.
I thought 24-hours was a long time in politics, so the saying goes, but it seems to apply to this never-ending USA-China trade war saga.
As soon as the Infineon story broke, European semiconductor stocks fell. That’s probably why Infineon issued a statement via China’s Xinhua news agency denying the reports, and saying it was continuing to supply Huawei.
I approached STMicroelectronics for comment too, given that Huawei is one of its top 10 customers. But even ST declined to comment.
Maybe, for now, Huawei is safe – temporarily – with its supplies from European chip vendors.
But for how long? It’s difficult to see how they won’t cave in to US pressure too eventually.
Arm is already feeling the heat, despite setting up a China JV, so if Arm has already caved in, how long before other Europeans do?
Things are moving so fast in this drama that no one really knows what surprises are next.
The only thing to do is hold on to your seats, and keep watching, as the US-China trade war roller coaster ride continues
This is Nitin Dahad for EE Times reporting from Taipei.
To wrap this week’s show, we’re bringing back Bolaji Ojo, Global Editor-in-chief for AspenCore Media. Bola, who resides in Switzerland, weighs in on the U.S.-China trade war.
All right. So I'm sitting here thinking about this China-US technology tussle, this trade war. And all kinds of crazy analogies are just going through my mind. And one that resonates very well with me is that of the tick and the dog, where the tick lands on the dog and thinks, "Well, I'm just going to suck this dog til it dies." It kind of reminds me of China thinking, "Well, I'm just going to take it all. I'm going to be the producer, the manufacturer and the design center for the entire world." And the United States saying, "Well, we're going to be supremo. We're going to be number one. Nobody's every going to exceed us. We're going to take it all also."
Well, so. As the story goes, the tick keeps sucking the dog. And then one day the dog dies. And then the tick finds out that it doesn't have anything else to suck anymore! And then the tick dies.
In this world, we are connected one way or the other. And what I can tell the tech world right now is this: It's a very simple message. President Trump has never managed a tech company. And neither has the Chinese leader. And yet these two are the ones kind of pulling the technology world into what I call the "model of (hipodo?)." Where Google announces one thing today because it has to follow US dictates. And then all of a sudden it goes back the next day to say, "Oh, sorry. We meant to say that we are really going to follow what the US government says. But now that the US government has changed its mind and given us 90 extra days, we're going to keep supplying and supporting Huawei's access to Google android."
Where are the tech leaders in the United States? Where are the tech leaders in China? Who has muzzled you guys? Nobody is speaking up. Everybody has caved in to folks who think it's a zero sum game and they're going to get it all. When are you going to find your mojo and actually bring these two nations together to understand the fact that if the tick kills the dog, there isn't going to be a future for the tick? Somebody needs to speak up.
This is Bolaji Ojo signing off for EETimes and AspenCore from Bern, Switzerland, where no president or party leader has the right or the authority to decide a country's fate.
This has been your weekly briefing from EETimes. You can read all these stories and more at EETimes.com. Thank you for listening.