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The Huawei Drama Is a Gift to U.S. Tech Companies

The Huawei Drama Is a Gift to U.S. Tech Companies

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  • The Huawei drama is NOT anything of a boon to US tech companies. In the near-term it is going to cause disruption across the supply chain and will cause some difficulties in managing supply chains, forecasting earnings and revenues. In the long term it will drive not only Huawei but other Chinese vendors

    The Huawei drama is NOT anything of a boon to US tech companies. In the near-term it is going to cause disruption across the supply chain and will cause some difficulties in managing supply chains, forecasting earnings and revenues. In the long term it will drive not only Huawei but other Chinese vendors to look for alternatives away from US tech companies. Unless the United States is in a position to foster much more innovation and entrepreneurship through education and upskilling, we have just created our own worst competitors, more Chinese tech companies.

  • President Trump's intention for blacklisting Huawei is nuanced beyond Chinese phones and 5G infrastructure being susceptible to government spying on American telecommunications. Current actions intend to curb Chinese 5G roll-out in the US while also creating a trade bargaining chip out-of-thin-air which

    President Trump's intention for blacklisting Huawei is nuanced beyond Chinese phones and 5G infrastructure being susceptible to government spying on American telecommunications. Current actions intend to curb Chinese 5G roll-out in the US while also creating a trade bargaining chip out-of-thin-air which can be negotiated down the road.

    Until such a bargaining chip is used, the administration buys large US telecom companies an infancy period with which they can advance their 5G technologies towards US roll-out in the next decade, but China will inevitably get there first in terms of global roll-out and disruption, meaning they'll be first in the world to take advantage of the industry-wide revolutions and spillover effects of 5G.

    Meanwhile, smaller US tech companies and start-ups whose business plans rely on fully-implemented 5G capabilities are the ones that will suffer from the Huawei ban, because Chinese start-ups and corporations alike will be capitalizing on 5G innovations years before any major US telecom players engineer and implement a similarly competitive network.

    In the short-run, the ban is a temporary bargaining chip in an ongoing trade negotiation between the US and China; however, in the long-run, the ban will hurt US entrepreneurs and stagnate our participation in 5G disruption opportunities against our Chinese counterparts. Regardless of who builds our 5G network, nationwide 5G connectivity is better than not having 5G connectivity in keeping up with global competitiveness.

    If the primary reason for not implementing nationwide 5G is the proported security threat, then a thorough and independent investigation of the matter will confirm or dispute the feasibility of the situation — which can then be followed up with state-level actions accordingly. Jumping the gun here speaks to the reality of the decision: The ban creates anti-competition in a space where we lag behind Chinese innovation; helping big tech and lowering the US nominal deficit in the short-run but stagnating the spillover potential of American startups in the long-run.

  • If you need a common enemy, create one!