To globalised technology firms, the contest between America and China feels like a nightmare
long since lost its lead in electronics. Or so many thought. When an earthquake and tsunami hit the country in 2011, its continued centrality to the industry quickly became apparent. Copper foils for printed circuit boards, silicon wafers to make chips, resin to package them—for many components Japan was the home of the biggest, sometimes only, supplier. As production ground to a halt, customers scrambled to find alternatives.
In May America’s Commerce Department blacklisted Huawei, a Chinese technology titan, and 70 of its affiliates, barring American firms from selling them certain technologies without government approval. This shed light on another bottleneck: chips. Like, a smaller Chinese firm which in 2017 briefly found itself in a similar situation, Huawei could not survive without chips designed in America.
or other Chinese firms were barred from buying more, China’s ambition to become self-sufficient in advanced chips would come a cropper, says Robert Castellano, an industry analyst.Then there is software. Three-quarters of the world’s smartphones, including many made by Huawei, use Google’s Android mobile operating system.
After the Japanese earthquake, many firms moved to identify risks in their supply chain and sought alternatives, says Bindiya Vakil, boss of Resilinc, which maintains a database of links between suppliers and monitors disruptions. But it is hard to will new high-tech companies into existence. And doing so would be costly. So the system remains largely unchanged.
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