Home / SmartTech / Trade between the US and China is entering a new era overnight – TechCrunch, according to announcements from Huawei, Foxconn and TSMC

Trade between the US and China is entering a new era overnight – TechCrunch, according to announcements from Huawei, Foxconn and TSMC

There has been constant news on the US-China trade front since the Trump administration began. President Trump has repeatedly disconnected from China’s economy. There was the trade conflict with weekly changes in US tariff policy, threats to ZTE and Huawei, China’s response to Qualcomm and NXP, and the introduction of new restrictions on Chinese investment in US startups and telecommunications infrastructure.

With COVID-19 and the subsequent collapse of the global economy, much of this conflict has been pushed into the background. A tentative US-China deal that was agreed before the worst pandemic appeared to receive even broader support as the economic indicators of the world̵

7;s two superpowers began to trickle.

Then this week happened, and in almost no time the trade relaxation between the United States and China was torn apart.

There have been three critical stories overnight that will change US-China trade for the foreseeable future, and there are many more stories lurking beneath the surface.

First of all, you received this morning’s announcement from the Department of Commerce that the Trump administration will ban Huawei from using US software and hardware in certain strategic semiconductor processes. This is to prevent the leading Chinese chip maker from increasing its market power technological capabilities. Yesterday, the government also announced an extension of the government’s export ban on Huawei and ZTE.

The Trump administration has threatened such steps since almost the first day of its term, and Commerce has even spoken the language, declaring that it is “closely and strategically” targeting the Chinese company. However, the importance of Huawei as one of China’s leading technology companies cannot be overstated, and the two steps together are already seen as a direct attack on China’s recovering economy.

Second, overnight you made a major announcement by TSMC – the world’s largest chip foundry and one of the few foundries that can handle the most advanced chips – that the Taiwanese company is investing and opening a large $ 12 billion factory in Arizona becomes. The release says the factory will be able to produce the world’s most advanced 5-nanometer chips when it launches in a few years. The announcement came after weeks of debates in Washington that aimed to limit TSMC’s ability to build chips for mainland China companies like Huawei – a move that TSMC argued that it would further increase its profitability and ability Investing in research and development would impact dramatically.

Thirdly, you received an announcement earlier this morning that Foxconn’s profits fell 90% due to COVID-19 and declining smartphone shipments. Foxconn, a Taiwanese hardware assembly company (among others), was involved in the smoldering trade dispute between the U.S. and China, and even tried to use Trump’s bliss to build its own $ 10 billion manufacturing facility in Wisconsin to support this plan to accomplish entirely in an embarrassing setback.

In the meantime, the trade agreement that had eased the tensions between DC and Beijing seems increasingly doubtful.

And that’s exactly what happened over night.

There are so many individual data points about US-China trade that it can be difficult to see the patterns. Politics have hardened, politics have weakened, but at heart, the US and China have tried to keep trade going, if only to keep their economies growing. This is what coupling was about: While there can be massive disagreements between the two sides, everyone has something that the other wants. China wants to build and grow, while America wants to design and buy.

COVID-19’s recent months have changed this calculation, as has an election year in the United States where caution has reached China’s record, bipartisan highs, according to surveys. The intense fire in the American economy with tens of millions of unemployed and growth that has initially stalled means that everything that could harm the country’s financial mathematics is being examined even more intensively. We are now seeing the fruits of this new normal.

There will be further decoupling maneuvers in the coming weeks. There will almost certainly be a renegotiation of the US-China trade agreement, although it is commented that neither side is interested in resuming these discussions.

However, the really interesting dynamic will be Taiwan, which is home to strategically critical sectors of the chip industry. TSMC’s announcement accepts the reality of decoupling, but tries to circumvent it Clutch the United States for Taiwan security. Taiwanese companies and the island’s politicians have avoided relinquishing their technology to other countries and created a dependency they hoped would protect the island in the event of an invasion in mainland China. If the Pentagon cannot get its chips, it will eventually have to intervene, or so thinking.

In this new world, TSMC’s construction of an American factory does not undermine this narrative, but actually strengthens the ties between the United States and Taiwan. More jobs, more trade, more travel and ultimately a deeper appreciation of the mutual meaning. The question is how far the Trump administration is willing to go here. Taiwan is applying to join the World Health Organization, where it was an observer until 2016. How deep are these relationships? Will the US go beyond its own diplomatic framework to push Taiwan’s reentry despite the Chinese opposition?

That comes next, but today it is clear that the world of semiconductors, internet infrastructure and the technical connections that have linked the United States and China for decades has become frayed and almost gone. It is a new era in supply chains and retail and an open world for new approaches to these huge existing industries.

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