Inside China Tech: The tech world becomes increasingly political
- Some Republican lawmakers have already urged the Trump administration to reject the proposed TikTok-Oracle deal
- Although Republicans have accused Democrats of being soft on China, many analysts see the current conflict as more long term and structural in nature
Here is a wrap up of some leading tech stories from this past week.
The clock is ticking
Political posturing by the Trump administration, according to analysts, adds to uncertainty over whether a deal between TikTok and Oracle Corp, which would prevent the short video-sharing service from being banned in the US, will be approved by Washington before a September 20 deadline.
“I don‘t think we can ignore the broader context in which this is happening, which is continuing to want to look tough on China,” said Justin Sherman, non-resident fellow for the cyber statecraft initiative at Washington-based think tank the Atlantic Council.
01:46
Oracle reaches deal to become TikTok’s ‘technology partner’, after Microsoft offer is rejected
“Pretty much everything the president has done and does on foreign policy is politically driven. It’s about ‘political posturing, looking tough, securing good deals’.”
Unlike the outright sale of TikTok’s US business that Trump wanted under an executive order he signed last month, the deal would make Oracle a “trusted technology provider”, the US tech company confirmed on Monday. Oracle would take over management of TikTok’s user data in the US, according to a Reuters report.
ByteDance deal for US TikTok said to give Oracle access to source code
Some Republican lawmakers have already urged the Trump administration to reject the proposed TikTok-Oracle deal. While Trump has the authority to sign off on a deal, national security officials’ concerns could sway his decision. TikTok has repeatedly said it has never been asked by the Chinese government to remove any content, and that the company would not do so if asked.
Last month, China’s Ministry of Commerce asserted its authority to review cross-border deals that would transfer certain local technologies overseas, including the systems that power TikTok’s recommendation engine.
The stakes are high for the Trump administration because of the potential impact TikTok’s mostly young user base could have on the US presidential election in November.
The Biden touch
With the US election fast approaching, experts are asking whether a victory for Democratic nominee Joe Biden will reverse an escalating tech war that threatens to split the global technology industry in half.
Over the past four years, a clash over policy between the Trump administration and Chinese leader Xi Jinping has taken relations between the world’s two biggest economies to their lowest ebb in over four decades.
The Trump administration has tightened US export controls on Huawei Technologies, restricted US government investment flows to China, imposed sanctions on Chinese AI companies such as Megvii and SenseTime over alleged human rights abuses in Xinjiang, and announced its intention to block China-developed apps, such as TikTok and WeChat, in the US.
All of the accused Chinese companies have denied being a national security threat or being wilfully involved in human rights abuses.
On the political stump, US President Donald Trump has railed against Biden, saying that Americans will “have to learn to speak Chinese” if Biden wins.
However, although Republicans have accused Democrats of being soft on China, many analysts see the current conflict as being more long term and structural in nature – certainly when it comes to the tech sector.
“There’s little perspective for meaningful improvement in US-China relations under a Biden administration,” said Agathe Demarais, the global forecasting director at The Economist Intelligence Unit (EIU). “The two countries will remain locked in a strategic competition for economic and technological dominance.”
Nobody knows where the current conflict will end. Some analysts say Biden as president could be even harsher on China, particularly in areas such as human rights and intellectual property protection.
Scientific American backs Biden in first endorsement in 175-year history
“No president will want to be accused of being soft on China,” said James Andrew Lewis, director of the technology policy programme at the Washington-based Centre for Strategic and International Studies (CSIS). “Biden’s policies will be better coordinated, less abrupt, but move in the same direction.”
Biden is a China critic, but he has also acknowledged US weaknesses, urging America to “sharpen its innovative edge” and join forces with other democracies to counter China’s “abusive economic practices”.
Biden has also promised “aggressive trade enforcement action” against unfair practices, particularly intellectual property theft, according to his campaign website.
Strong-arming Nvidia
Many analysts believe the US$40 billion deal may face the same fate as Qualcomm’s failed bid for European chip maker NXP, which was scuttled after China stalled on approving the transaction amid rising US-China trade tensions.
Completion of the Nvidia-Arm deal is far from certain as most Chinese watchers agree that Beijing would be concerned about the possibility of Arm technology coming under US export control regulations.
“China has more reasons to block the deal than to approve it,” said Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm Icwise. “How to guarantee Arm continues to be a neutral and open platform after the sale is what concerns China,” said Gu.
Cameron Johnson, an adjunct faculty instructor at New York University and partner at Tidal Wave Solution, said although Arm’s technology was freely available to all users via an IP licensing business model, it will be challenging for China to agree to the deal in the current environment.
China’s antitrust regulator could block Nvidia from acquiring Arm, which Japanese investment group SoftBank Group acquired for US$32 billion in 2016, given that it may create a monopoly for the supply of chip design tools.
When Qualcomm bid US$44 billion to buy Dutch chip maker NXP Semiconductors four years ago, China was the only jurisdiction that did not approve the merger. The deal collapsed just over 18 months later, adding to then already tense relations between the world’s two largest economies.
The Nvidia announcement comes at a time when China’s telecoms champion Huawei Technologies is facing a life or death situation due to crippling sanctions imposed by the Trump Administration, blocking its access to US-origin semiconductor technologies.
Arm’s software and tools are crucial for chips used in consumer electronics, networks and servers, and Internet of Things (IoT) applications, with Apple, Huawei, Qualcomm and Samsung all depending on Arm IP for chip design and development. Huawei‘s Kunpeng 920 server CPU, its Kirin 990 smartphone processor and Ascend 920 AI chip are all based on Arm’s design architecture.
