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Huawei has had a rollercoaster month. First, the company was placed on an entity list<\/a>, prohibiting US companies from doing business with it. Then, this weekend, Donald Trump eventually reversed course<\/a> in a face-to-face meeting with Chinese premier Xi Jinping at the G20 Summit in Osaka, Japan.<\/p>\n This is excellent turn of events for Huawei. Just a few weeks ago, it faced oblivion. The embargo was an existential threat for the company, preventing it from sourcing chipsets, mobile modems, and even the underlying ARM instruction sets used by its HiSilicon Kirin processors. Now, it\u2019s able to resume as it previously did.<\/p>\n Huawei doesn\u2019t emerge entirely unscathed, however. It\u2019s suffered tremendous reputational damage, which will take years to reverse. The company, which quickly obtained market share in Europe and Canada thanks to its (frankly, excellent) flagship phones, now looks like an unknown quantity. Consumer doubt about the long-term viability of Huawei will linger.<\/p>\n But I can\u2019t help but feel as though the biggest loser from this spat will be Silicon Valley, however, which was a major supplier to Huawei.<\/p>\n This incident has shown that Huawei\u2019s biggest vulnerability is the globalized nature of its supply chain. The company was brought to its knees, all because it sourced much of its components from Western firms like Intel, Qualcomm, Google, and ARM. Although it\u2019s been given a reprieve, you can guarantee China\u2019s tech ecosystem will be working extra time to ensure that it never again finds itself in such a precarious situation.<\/p>\n On a very basic sense, it\u2019ll mean that in the coming years, Chinese firms will be wary of sourcing components and technology from foreign firms.<\/p>\n Looking at the smartphone sector, you\u2019ll see China is a dominant player. That\u2019s thanks to firms like Huawei and BBK Electronics (which owns Oppo, Redmi, and OnePlus). Each year, they spend billions on components and licensing. As domestic alternatives catch up with their international rivals, you can expect most of that spending to be directed inward.<\/p>\n Western technology firms can expect to lose billions in revenue, all because President Trump decided to use Huawei as a pawn in a trade war.<\/p>\n Of course, that is only a viable proposition if there are domestic products as sophisticated as their Western counterparts. Right now, that\u2019s not the case. There\u2019s no real alternative to ARM\u2019s chipsets or Google\u2019s Android, but you can guarantee China\u2019s legion of highly skilled R&D professionals are working on it.<\/p>\n Frankly, China\u2019s been gearing up for this for a long time. In 2015, the previous Chinese premier, Li Keqiang, announced the \u201cMade in China 2025<\/a>\u201d initiative. This program would see China pivot from being a consumer of high-technology products (like aircraft and semiconductors), to actually building and designing them by 2025. The Huawei embargo, combined with the similar embargo suffered by rival ZTE in 2016, will remind China\u2019s leadership of the need to keep to this deadline.<\/p>\n That means more competition for Western firms, an end to some monopolies, and crucially, an increasingly affluent market of over one billion people closed off.<\/p>\n While this situation was probably inevitable, you can argue the Trump administration\u2019s attacks on Huawei have sped up this process massively.<\/p>\n Any honestly? I\u2019ve got mixed feelings. On one hand, competition is good. It inspires technological innovation, which benefits consumers and businesses.<\/p>\n But on the other hand, I worry that we\u2019re witnessing the twilight years of technological globalization. I think there\u2019s something really beautiful in knowing that something as basic and commoditized as a smartphone is the product of many different countries. It\u2019d be sad to see countries retreat behind their own borders, and that international co-operation to end.<\/p>\n For more gear, gadget, and hardware news and reviews, follow Plugged on \n Published July 1, 2019 \u2014 10:13 UTC\n <\/p>\n<\/p><\/div>\n
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