Date
17 January 2019
Though Huawei is strong in certain 5G technologies, it still relies on the West for a wide range of core components .Photo: Reuters
Though Huawei is strong in certain 5G technologies, it still relies on the West for a wide range of core components .Photo: Reuters

Does China really pose a threat to US in technology?

There has been talk that the action against Huawei CFO Meng Wanzhou, who has been arrested in Canada earlier this month at the request of the United States, can be seen as part of Washington’s attempts to contain China’s technology sector.

Huawei is the dominant player in China’s 5G industry. It’s true that Huawei is rather strong in hardware and applications in the 5G arena, but is it really such a threat to the US?

Let’s talk about chips for 5G use first. The Chinese telecoms equipment maker is indeed quite good with CPU design; its Hisilicon CPU can almost compete with leading manufacturers in US in terms of technology.

But in terms of chip production, Huawei still lags by a wide margin.

There are three leading chipmakers in the world, one in US, one in South Korea, and the other in Taiwan — Taiwan Semiconductor Manufacturing Company or TSMC.

Currently, TSMC is capable of producing 7 nanometer chips, while its rivals in US and South Korean can only produce 10 nanometer chips.

The Taiwanese company said it plans to start making 5 nanometer chips at the end of 2019, and it is already building the next-generation plant for producing 3 nanometer chips, which will start production in 2022.

By contrast, 14-nanometer is the most advanced technology in mainland China, lagging behind by two generations.

To catch up, China has to spend hundreds of billions of dollars, and it might take five to 10 years. Not to mention that China is highly dependent on importing key chipmaking equipment, from firms like ASML in Holland.

Worse, ASML would only sell China mid- to low-end models.

Graphic Processing Unit is also critical to 5G technology. At the moment, the GPU technology is largely controlled by two US companies.

In memory chips, DRAM and NAND are two main types. The top three players have snapped up 90 percent market share in DRAM market, while five major players dominate the NAND market. Again, massive upfront investment is needed if China wants to catch up.

In conclusion, though Huawei is strong in certain 5G technologies, it still relies on the West for a wide range of core components.

The China threat rhetoric is thus more of an excuse, rather than anything else, to suppress China.

This article appeared in the Hong Kong Economic Journal on Dec 17

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Columnist at the Hong Kong Economic Journal

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