Huawei and Google have been dragged into the US-China trade war. Photos: AFP/Alain Jocard/Christof Stache

Semiconductor stocks including Intel (+2.2%) and Nvidia (+1.35%) were among the top performers in an otherwise listless New York session. The signal development of the day was a meeting between executives of US technology companies at the White House with economic adviser Larry Kudlow and Treasury Secretary Steven Mnuchin, a forum for the tech industry to ask the administration to ease the ban on sales to Huawei. No news has emerged from the meeting, but the announcement of the meeting itself signals a shift in administration strategy.

During the past two weeks, the White House concluded that America’s campaign to dissuade US allies from engaging Huawei to roll out 5G mobile broadband had become a national embarrassment. As I wrote in my “Spengler” column July 7, the American claim that Huawei might steal data through back doors built into its network failed to convince the Europeans.

The issue, rather, is that the next generation of mobile broadband soon will incorporate quantum cryptography, a foolproof security system pioneered and field-tested by Chinese scientists. America’s public threat to reduce intelligence-sharing with countries that host Huawei networks lacked credibility because America’s dominance in signals intelligence (SIGINT) will shrink when 5G comes online.

A gauge of Huawei’s success is the poor performance of the stock price of its largest competitor, Ericsson. Ericsson’s stock price dropped 11% after it announced respectable quarterly results July 16, but admitted that it had secured no additional business at the expense of Huawei.

The ban on exports to Huawei raised the prospect of a segmentation of the global market into American and Chinese zones, to the marked disadvantage of the United States. As I reported, the ban on American exports to Huawei would have prevented the Chinese telecommunications giant from using Google’s Android operating system for its handsets. Huawei made its own handset operating system, brand-named Hongmen. China buys 400 million handsets a year, enough to force developers to rewrite Android applications for the Huawei system. That would break the American duopoly of Apple and Google.

Huawei had already set in motion the rollout of its operating system when the Chinese company’s chairman Liang Hua unexpectedly announced July 12 that it would not launch the new product. Industry observers concluded that the White House had decided not to cut off Huawei’s access to Google’s Android system.

The previous week, senior Google executives reportedly warned the Trump Administration that a competing Huawei system would endanger national security. According to news account, Google argued that a Huawei system would be less secure than Android, but that seems beside the point: The national security concern arises from the prospect that Huawei would muscle into a critical business controlled until now by American companies.

American chipmakers are just as concerned. Huawei began a crash program to build its own chipsets for phones (the Kirin line) and large-scale processors (the Ascend chip series), designed by its subsidiary Hisilicon. The chipsets are fabricated by Taiwan Semiconductor Manufacturing and others. Qualcomm, Nvidia and other producers of high-end chips fear a trade and price war that might box them out of the Asian market.

That’s what makes today’s meeting between Trump administration officials and technology executives especially timely. It points to a resolution of the US-China trade dispute with the support of a pragmatic president preparing for a re-election campaign.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Join the Conversation

28 Comments

  1. Spot on with this write-up, I seriously believe this website needs
    a lot more attention. I’ll probably be back again to read through more, thanks for the advice!

  2. Hello, i think that i noticed you visited my blog
    so i got here to return the desire?.I am trying to find things to
    improve my website!I assume its ok to use some of your concepts!!

  3. Having read this I thought it was really informative. I appreciate you taking the time
    and energy to put this information together. I once again find myself spending way too
    much time both reading and leaving comments. But so what, it was still worthwhile!

  4. Hello There. I discovered your blog using msn. This is a very neatly written article.

    I will make sure to bookmark it and return to learn extra of your useful info.
    Thank you for the post. I will certainly comeback.

  5. Hi there I am so happy I found your blog, I really found you by mistake, while I was looking on Askjeeve
    for something else, Nonetheless I am here now and
    would just like to say thanks for a remarkable post and a
    all round thrilling blog (I also love the theme/design), I don’t
    have time to read it all at the minute but I have
    saved it and also added your RSS feeds, so when I have time I
    will be back to read a great deal more, Please do keep up the excellent
    work.

  6. I loved as much as you will receive carried out right
    here. The sketch is tasteful, your authored material stylish.
    nonetheless, you command get got an nervousness over that you wish be delivering the following.
    unwell unquestionably come further formerly again as exactly the same nearly very often inside case you shield this increase.

  7. Hello there! I simply want to give you a big thumbs up
    for the excellent info you have here on this
    post. I’ll be returning to your website for more soon.

  8. You’re so awesome! I do not believe I’ve truly read
    a single thing like this before. So great to discover
    someone with unique thoughts on this subject. Seriously..
    thank you for starting this up. This web site is something that is
    needed on the web, someone with a little originality!

  9. Pretty great post. I just stumbled upon your weblog and wished to say that I have really loved browsing your blog posts.

    After all I’ll be subscribing in your rss feed and I’m hoping you
    write once more very soon!

  10. Hi! This post couldn’t be written any better!
    Reading this post reminds me of my old room mate!
    He always kept chatting about this. I will forward this
    post to him. Pretty sure he will have a good read.
    Thank you for sharing!

  11. Right now it sounds like Movable Type is the best blogging platform out there
    right now. (from what I’ve read) Is that what you’re using on your blog?

  12. Hello just wanted to give you a quick heads up
    and let you know a few of the pictures aren’t loading properly.
    I’m not sure why but I think its a linking issue. I’ve tried it in two
    different web browsers and both show the same outcome.

  13. Great web site you have got here.. It’s difficult to find good quality writing like yours these
    days. I really appreciate people like you!

    Take care!!

Leave a comment

Your email address will not be published. Required fields are marked *