INSUBCONTINENT EXCLUSIVE:
Authors: Super UserWhat do many TVs, batteries, computer monitors, and printer ink cartridges all have in common They're made in China, of
course. They could all also cost about a quarter more if the talked-up trade war between the US and China becomes reality. However, unpick
what's happening, and why, and a Pandora's box opens that reveals just how much this is not only about trade, but about domination of future
tech like AI, autonomous cars and 5G.The Trump administration doesn't think China properly protects intellectual property or sufficiently
opens its markets to US companies. It also happens to have a massive trade deficit with China, with Americans importing vastly more goods
from China than it exports. Which is why it proposes putting 25 percent tariffs on imports of TVs and over a thousand other product
categories from China, ostensibly to help create a level playing field. Those tariffs equate to about US$150 billion in total
The trouble is, the cost could end up simply being passed straight back to anyone in the US that wants to buy Chinese-made
electronics.Chinese-made TVs could be about to jump in price for buyers in the US Credit: Jamie Carter(Image: © Jamie Carter)How expensive
could they getChinese-made electronics could become as much as 23% pricier for US shoppers, according to a report from the Consumer
Technology Association (CTA) – which stages the CES in Las Vegas each January – and the National Retail Federation (NRF). A TV made in
China that costs $250 today would cost $308 after the tariffs are applied, it says, while one that costs $500 today would cost $615
"These proposed tariffs are bad for the economy, businesses and American consumers," says Gary Shapiro, CEO and president, CTA."For TVs,
just one of the 1,300 products on the administration's list, American pocketbooks will suffer." The US imported 23 million TVs from China in
2017, according to Sigmaintell.Skyworth, TCL and Hisense together account for a fifth of TVs Credit: Jamie Carter(Image: © Jamie
Carter)Does this mean all TVsThat 23% price increase applies only to TVs imported from China
"The top three Chinese brands (TCL, Hisense Skyworth) combined accounted for more than 20% of worldwide shipments during 2017, and
manufactured many more sets for other brands too," says James Manning Smith, Research Analyst at Futuresource Consulting. China is
currently experiencing a boom in TV-making factories, and it seems inevitable that China will pretty soon dominate TV production. "The
likelihood of this policy proposal becoming law is still in the balance, but the impact on consumers would be considerable," says Manning
Smith, suggesting that the average price of a TV in the US could jump from $450 to $500.However, there are always loopholes
"Companies such as TCL, which has grown rapidly in the last 24 months in the US and now finds itself competing closely with LG, has
manufacturing facilities all over the world," says Manning Smith. "It would be likely that they would be able to pivot production of sets
destined for the US to countries unaffected by the tariff." Both TCL and Hisense have assembly plants in Mexico.Chinese telecoms and
handset-maker ZTE just got a ‘denial order’ (Image: © ZTE)Smartphones cyber-espionageThe US is very suspicious of Chinese
telecom-equipment makers, and the end result is that Americans can't buy a Huawei P20 Pro, and soon, the ZTE Axon 7
Why National security. "Cyber espionage has been a recurring theme shaping American technology and internet related policy for some time,"
says Manning Smith. That's why Huawei got dumped by ATT in January, and it's also why the Trump administration last week slapped a 'denial
order' on ZTE, banning it from importing US components
Now the UK is nervous. "With ZTE reliant on components, IP and software sourced from American companies, the restrictions effectively
inhibit ZTE from producing and selling further devices," says Manning Smith. ZTE suggests that the decision, if implemented, could bankrupt
"The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE
including a large number of US companies," said a spokesperson.It all goes to show just how reliant US and Chinese tech companies are on
ZTE may have been the third or fourth largest smartphone-seller in the US in 2017 – and 60% of the world's smartphones are sold by Chinese
owned companies – but without one thing from US companies, the business doesn't work
That thing is the microchip.Key to understanding the dispute is microchips.Cheap as microchipsTariffs aside, the US is mostly concerned with
protecting its microchip business, which is considered critical to future tech markets. Although China might be the global headquarters of
electronics, it doesn't dominate the really advanced tech – semiconductors – which produce the processors and chips at the heart of all
phones, tablets, and smart devices. China’s high-tech sector hugely relies on overseas chipmakers
Taiwan's MediaTek and Taiwan Semiconductor, and South Korea's Samsung Semiconductors and Hynix, are all major players, as are US companies
Intel and Qualcomm (in March a Presidential Order prevented a proposed takeover of Qualcomm by Broadcomm on national security
grounds). With the future of AI, autonomous cars and the rollout of 5G at stake, this is a politically sensitive industry.Although Chinese
companies do make chips, such as Huawei, RockChip and Foxconn, the industry is a work in progress that the country's 'Made in China 2025' is
trying to address. Its aim is to have 70% of microchips produced by Chinese companies by 2025
And that means buying up technology from around the world."Chinese companies want to create semiconductors inside China, rather than import
from the States, but they know that the only way to do that in the next few years is using intellectual property," says David Harold, VP
Communications, Imagination Technologies, whose technology enables the creation of chips. He says that right now about 25-30% of
Imagination’s new licenses are coming from China, but that US semiconductors are not irreplaceable in Chinese assembled systems. "In the
immediate term, there are plenty of semiconductors available for TV and mobile from Taiwan, or automotive from Japan and Israel," he
says.Qualcomm makes the Snapdragon chips in premium Android phonesIs the global tech market history"Long-term, I think the expansion of the
Chinese chip industry is likely to be good for world electronics consumers," says Harold
"Though not necessarily in the USA.”While it's calculated to punish China, banning the likes of Huawei and ZTE could force them to more
quickly advance their chip-making businesses.However, Dr Joe Zammit-Lucia of think tankRadix and co-author of Backlash: Saving Globalisation
from Itself is not convinced that a decrease in global supply chains will push up prices for tech goods
"Prices are determined primarily by what people are willing to pay, not by the cost of manufacturing," he says. Others think that the
global tech industry's sheer complexity makes it difficult to predict the consequences of any single policy. "These companies and
technologies are so internationally intertwined it is difficult to separate the layers and understand the potential impact on the worldwide
market," says Manning Smith. "It is certain that should a 25% US-China trade levy be enforced there will be a worldwide effect on the cost
of consumer electronics."The tech industry is globalisation writ large, and it's probably staying that way, but one thing's for sure: no
trade dispute has been this fascinating since the opening sequence of The Phantom Menace.0521e9bf6746c56c7da994dd908fdb22.jpg#
