In my last column, I spoke about the challenges of tariffs and alternate sources for PCBs and the larger divide between the U.S. and China, potentially leading to far broader implications for U.S.-led vs. China-led technologies. The world has changed dramatically since then. We’re thick into the midst of a global COVID-19 outbreak, which I believe has only created a larger divide between the two largest economies: the U.S. and China. It has become apparent that critical supply chains have been broken and, for the most part, each nation has been fending for themselves.
This divide started when China evolved from just making shoes and toys to engaging in high-tech with significant economic and military implications. This divide has manifested most vividly in the telecom industry with the upcoming 5G rollout. Whoever controls the global digital infrastructure controls the world. This is where the U.S. has gone to extreme measures to rein in Huawei—China’s leading maker of telecom equipment. The company leads the world in 5G with its promise of extreme data rates (up to 20 Gbits/sec) and much lower latency (around 1 ms). 5G will become the backbone and central nervous system of the global economy, powering technologies such as IoT and AI to places currently not possible. At the heart of this fight is the worry that Huawei—and, implicitly, the Chinese government—will have access to everything that goes through a Huawei-supported network.
By any measure of objectivity, America is losing this fight against Huawei in the great “race to 5G.” Huawei keeps growing, and the 5G rollout in China continues at a rapid pace. We know this directly as almost every one of our China PCB suppliers is extending lead times by weeks for one main reason: they are flooded with 5G orders from the likes of Huawei and ZTE.
Now that China is ramping back up to full capacity after living through the brunt of COVID-19, they are in a unique position to gain even more ground on the U.S. The strategy the U.S. has deployed to battle this onset is a fundamentally flawed one. Their solution is to ban or seek permission from Washington D.C. by any chipmaker that uses U.S. technology to sell its products to Huawei. Building a wall around Huawei is impossible in a hyper-connected world where technology and talent can flow freely. The wall has already started to crack; Germany, for example, has forged ahead with incorporating Huawei into its 5G system.
A technological quarantine won’t work; it only provides extra incentives for Huawei and China to become technologically self-sufficient. Last year, Huawei announced a plan to develop an “invincible iron army” of friendly suppliers if they permanently lose its U.S. partners. It’s already developing its own operating system to eliminate the need for Google’s Android platform and allow it to compete directly with Apple iOS.
It’s like we’re trying to win today’s “technology cold war” with yesterday’s arsenal and old thinking. If anything, the onset of COVID-19 has taught us that we need new thinking and a new approach. I have always maintained that business thrives on openness and a healthy balance of competition and co-operation. The good news is our technology industry has thrived on these guiding principles, and the same approach should now lead the way to a new future.
Look at what happened in the IT world when the movement to the cloud and hosted platforms became the wave of the future. Our technology companies solved the problem through openness and innovation—the idea of virtualization allowed the cloud and hosting platforms to become realities. Virtualization basically decouples services from the underlying hardware and allows virtual provisioning of an entire network.
Why can’t this be done with mobile networks? It turns out that it can. Mobile networks have long been dominated by specialized hardware and are more and more becoming defined by software. Rakuten—a Japanese company—launched the world’s first fully “virtualized” mobile network on April 8, built using general-purpose hardware and a lot of software, mostly from companies like Nokia, Qualcomm, and Cisco. Additionally, introducing a virtualized software layer would allow for a solid security layer where access to data passing through the network could be much more secure. In such a virtualized network, the fear of security breach using components from even Huawei could be minimized or possibly eliminated.
My essential point here is that we need to rely on time-proven success of ingenuity, inventiveness, and openness, which have been the hallmark of U.S. companies to bring solutions that can be embraced by everyone, including China. I am confident that no one—not the U.S. nor China—wants two separate, unconnected major technology platforms, with the world divided into two internets and two mobile networks that don’t interact with each other. If that happens, humanity may follow into those two camps, which would be even worse.
Mehul J. Davé is CEO and chairman of Entelechy Global Inc. and chairman of Linkage Technologies Inc.