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Tags Current Affairs

Tech cold war

Date: 22 July 2020 Tags: Miscellaneous

Issue

What began as a report by the US House Intelligence Committee flagging issues posed by Chinese telecom companies Huawei Technologies and ZTE nearly a decade ago, has evolved into a full-scale duel between the two global technology powerhouses.

 

Background

The latest US steps against Huawei mark the first real prohibitory action by a western government in the nearly two decades after the equipment major branched out to set up shop in Europe.

 

Details

  • While China has traditionally resisted allowing American big-data companies such as Facebook and Google to operate within its jurisdiction, there have still been significant dealings between the two countries on the technology side until now.

  • Last year, Apple recorded $100 million of daily sales in China, while Huawei Technologies reported record revenues primarily from its exposure in western markets, including the US.

  • A subsequent move by the UK to reverse an earlier decision and block Huawei from its 5G networks aligns with the US view.

  • A new set of US restrictions imposed on the use of chip-making tools means Huawei could face shortages in its supply of specialist chips, an area where the Chinese are trying to build expertise.

  • Huawei sells its products and services in more than 170 countries, blitzing past Ericsson as the largest telecoms equipment manufacturer in the world in 2012.

  • It overtook Apple as the world’s second-largest manufacturer of smartphones in 2018 and had annual revenue of $122 billion and some 194,000 employees.

  • In its report submitted in 2012, the House panel noted that Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States. Last month, the US Federal Communications Commission designated the two companies as national security threats.

  • It is being described as a geopolitical struggle over technology that threatens to divide the world into two distinct technological blocs, with both countries striving to limit the other’s access to its advanced know-how.

  • India’s hesitation in acting against Chinese equipment makers in the telecom industry has derived from the view that the Chinese have brought in a semblance of competitiveness to a market earlier dominated by pricier European firms such as Nokia and Ericsson.

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