comment on this article

'One world. two systems'

​With the confrontation between China and the US continuing to escalate, are we seeing the beginnings of two separate global supply chains?

As the US-China "tech war" continues to rumble on, with no signs of ending, China looks like it is accelerating the development of a home-grown tech ecosystem that will replace the likes of Intel, Microsoft, Oracle and IBM.

While Chinese firms would likely take years to catch-up with these established global players the US's 'push-back' against the likes of Huawei and TikTok is forcing China's hand, so it is ramping up its investment and R&D activity in terms of critical industries such as semiconductors.

In addition, a growing number of Chinese government agencies look set to replace all computers using US chips in the next five years.

It's not all one way, however, and there are certainly risks for China too. Foxconn, for example, is planning to move more of its production outside of China due to the impact of the trade war with the US and is looking at not only the US but India, Southeast Asia and the Americas. It wants to cut costs but also avoid US tariffs and is talking of creating new ecosystems.

So, will China and the US end up splitting their supply chains completely, with both making and sourcing their own production equipment, software, semiconductors and systems?

China and the US have certainly lost whatever trust they had in each other; the threat of a schism developing in the global economy and all that could mean for the global electronics supply chain is certainly growing, and now China and Russia have announced plans to work together on the development of 5G.

It does seem as if the 'one world, two systems', is fast becoming a reality.

Neil Tyler

Comment on this article

This material is protected by MA Business copyright See Terms and Conditions. One-off usage is permitted but bulk copying is not. For multiple copies contact the sales team.

What you think about this article:

Add your comments


Your comments/feedback may be edited prior to publishing. Not all entries will be published.
Please view our Terms and Conditions before leaving a comment.

Related Articles