Story |

Back to the Stone Age?

Story by
Julio Kongyu

Julio Kongyu

Vice-President for Public Affairs, Huawei Europe

On 19 May this year, in the absence of evidence, the US Department of Commerce included Huawei and its subsidiaries on the so-called "entity list", prohibiting them from obtaining components and related technologies from US companies without the approval of the US Government.

This undermines the US’s own credibility in the global trading system, creating a dangerous precedent that would imply a return to self-sufficiency you could say has its roots in the Stone Age.

Do we really want to live in tribes again?

In the Stone Age, which began over 10,000 years ago, human beings cultivated their lives in tribes. Social development was slow, little scientific and technological progress occurred, and daily life appears to have been mind-numbingly repetitive.

Once humans entered the Bronze Age however, and learned to collaborate, they developed machinery. As time went on, tragedies on an epic scale in fact led to accelerated human cooperation. The outbreak of the Great Plague in the Middle Ages, for instance, resulted in the rise of German artisanal workshops and British textile industry. After that, the division of labor, and regional and then global expansion, led to the rapid development of science and technology.

Over the past 50 years, new technology has been represented by information technology, and this has been possible due to cross-border and cross-sectoral cooperation and the division of labor reaching new levels, creating so much well-being for so many of us.

Should the US be able to break up the global hi-tech supply chain at its whim?

The so-called Wintel alliance (where personal computers run Microsoft Windows on Intel processors) goes back to the 1980s. It has made life easy for computer vendors around the world who know that Intel's products can be purchased anywhere, at any time, and so they do not have to spend years and huge amounts of money investing in research and development.

We also know that, thanks to the Android-ARM-Qualcomm alliance, global smartphone vendors can develop Android open source operating systems and use Google services. ARM also licensed the chip kernel to promote rapid development of smart terminals with almost the same computing performance as a PC.

When Intel, Microsoft, Google and Qualcomm gained a fiercely-fought advantage in this field, global buyers did not have the vigilance or enthusiasm to keep back-up sources. As a result, a large number of customer resources flowed to these enterprises. Due to the trust placed in Intel and Qualcomm around the world, they now have stable customers and have accumulated huge capital, dwarfing the research and development efforts of their rivals.

The division of work and cooperation between the global ICT industry chain and the supply chain have essentially become simultaneously global. As a result, "trust" has become the foundation of the global ICT industry supply chain. But, today, because of the “entity list”, trust is eroding in the supply chain and is seriously damaging it.

US chip giant Broadcom recently said that Huawei’s placing on the entity list would lead to a 10% drop in sales and lose it USD 2 billion in revenue.

Lisa Su, CEO of AMD, said Huawei was its biggest customer and that the sales ban would result in the loss of hundreds of millions of dollars for companies such as hers. Qualcomm, Intel, ARM and other companies have all said they face billions of dollars in losses. Hermann Hauser, co-founder of ARM in Cambridge, UK, said the restrictions would damage the US itself - not just Huawei and ARM - and global hi-tech enterprises in general over the long term.

Should the US unilaterally determine the technical division of work driven by Moore's Law?

There is no doubt that the United States has produced the world's largest hi-tech champions and led the entire industry chain to move forward with incredible self-belief. The global computer and smart terminal industry has helped the US’s two big chip giants create a modern-day miracle that has lasted nearly half a century, on the basis of what is known as Moore's Law.

Put simply, Moore's Law says that an integrated circuit will double in performance every 18 to 24 months. The miracle of Moore's Law is the result of active cooperation between the world's chip industry and American companies. This not only reflects the great force of science and technology, but also the global chip industry’s trust in US chips and software companies. Based on this industry chain, we invest hundreds of billions of dollars in R&D every year to develop information technology. As a result, the industry is on the cusp of a new era where the Artificial Intelligence it is developing will liberate people and direct them to different kinds of labor, and help those who have until now been severely disadvantaged in society. Blind and disabled people, for instance, will able to live more and more like those without disabilities through technologies such as Augmented and Virtual Reality.

All this global societal development through technology is put at risk, however, when countries believe they can go it alone. Businesses and consumers could come to think twice about buying American technology products in the future, especially chips. Semiconductors represent core US technology and are the jewel in its R&D crown. If buyers start to look elsewhere, it will have a disintegrating effect on the ICT ecosystem as a whole.

Are European consumers already paying for this dispute?

The US has said that the entity list is designed to protect national security, but President Trump also seemed to indicate that, if the Sino-US trade talks go well, Huawei may be taken off the entity list. The problem is, if national security issues cannot be traded and the US Government is unable to produce evidence that Huawei has “misbehaved”, it is essentially using tactics that could result in a trade war.

The US government is not setting a good example here for the rest of the world to follow. Semiconductors and related components are the bedrock of the global technology industry chain, and the world has enjoyed the benefits of this ecosystem for half a century.

As a result, new Huawei smartphone users are deprived the right to the access of Google services due to Trump’s administration order. European users are innocent: how and why should they pay for this administration order if US politicians continue to behave like this? It seems they are being punished for something they are not involved in.

Do we really want to go back to the Stone Age?

If the US Government's "ban" on Huawei takes effect, there will soon be two results:

First, Huawei will be forced to develop its chip technology and other key cutting-edge technologies as far as it can. Many countries will have to consider independently developing their own technologies to avoid being added to an "entity list", which will lead to the fragmentation of global information technology.

Secondly, the US chip industry and downstream science and technology will be faced with a stark situation. The global ICT industry chain is highly integrated and complementary, and the Chinese market is huge. Engineers in the information industry and users of Moore's Law can no longer close their eyes to this. The possibility that the next company to suffer could be South Korean, European, or Japanese, has not escaped anyone.

And, as for European users, they will not tolerate losing the technology they currently enjoy. This is why I believe that a return to the “Stone Age” does not beckon. The semiconductor industry is a landmark of human progress, globalization, industrial and sectoral collaboration. We are not ready to give up all the gains which we as a society have made over the past 50 years.