Chip Liberation for China?

Jul 7, 2022

Accidental Conflict raises the possibility that America’s fixation on Huawei may well be a foil for US neglect of its own innovation and technology imperatives.  The chapter on “Huawei as a Trojan Horse” explores this issue in detail, unmasking false allegations regarding the so-called backdoor threat to America’s new 5G telecommunications platform. The related point is also made that US sanctions on Huawei and its supplier network could encourage China’s leading technology company to accelerate its push for self-sufficiency, meaning that the United States could lose its leverage as a source of demand and a potential choke point in the Huawei supply chain. These trends now appear to be playing out.  Huawei’s new Mate 30 smartphone released in September 2019 was, in fact, produced without any US components.   And the share prices of Chinese chipmakers are now surging as markets anticipate a shift to onshore substitutes in response to an intensification of US pressures to restrict China’s access to western made and designed semiconductors. This is a classic example of the perils and unintended consequences of false narratives — and how they can backfire in sparking Accidental Conflict.

You can follow me on Twitter @SRoach_econ

Sign up for Stephen’s Dispatches: