Comment The Year of the Escalating Trade Dispute

Heinz Arnold, editor-at-large Markt&Technik, HArnold@weka-fachmedien.de
Heinz Arnold, Editor at Large Markt&Technik Tel. +49 89 25556-1253 harnold@weka-fachmedien.de

While it looked as if a slight easing could take place between China and the USA in the short term, the fronts in the trade dispute are currently hardening again. No one is likely to profit from this.

At the latest since this year, it should be clear to everyone that China wants to catch up in terms of technology and is not afraid of taking the necessary measures. It should also be clear that things are not always fair. Chinese companies like to copy the technology of the leading countries in order to offer their own devices cheaper. In this way, markets can be conquered worldwide.
Others have shown that this works. Around 1990 it looked as if Japan would conquer the semiconductor world. Instead, countries such as Taiwan and South Korea have risen. China now considers it essential to manufacture semiconductors in its own country. Currently, China spends more money on importing chips than on oil.
But there is more to it than that: anyone who wants to play a role in the world in the future needs the small chips. Industry 4.0, AI, autonomous driving, medical technology, aerospace, and military technology only work on their basis. The USA made this clear to the world when they banned ZTE. The company almost went bankrupt. Now the USA has further escalated the dispute with China over the arrest of the CFO of Huawei, the daughter of the company founder.
In many areas, Chinese technology is principally no longer inferior to western technology. In the field of 5G, China could even take the lead. This is exactly what gives the trade war between the USA and China a very unpleasant aftertaste. Vice President Mike Pence had publicly stated that "Made in China 2015" was based on the theft of American technology. Thatalone shows how hardened the fronts are. Now the impression arises that the USA is evading technical competition, is offended, and curling up in a ball.
The fact that the USA is in a position to go even further is shown by its behavior towards the Chinese Fujian Jinhua, which wanted to start manufacturing DRAMs this year. Not to mention whether the accusations of stealing company secrets are true: If American equipment manufacturers are no longer allowed to supply the company, it could look gloomy for Fujian Jihua’s production. And it shows what leverage the USA has because US companies are still leaders in the equipment market.
On the other hand, neither US equipment nor US IC manufacturers should be thrilled to be excluded from an interesting market. The semiconductor industry is globally networked. Whoever uses rough tools to break up the networked global structures is not only harming others, but above all himself. Even if the simple slogans can be effective for the public, they are not the result of rational considerations. Will such considerations be able to assert themselves in the coming year?