Recent spat between America & China over export restrictions over US chips to Chinese manufacturers was not an isolated incident. For some time China is copying and thereafter mass producing tech stuff. No More. China has emerged as a peer competitor in chip manufacture.
Facts and Figures
1. China has increased its industrial robot fleet
to 295,000 compared with 34,000 in the US and 2,500 in the UK.
2. Chinese cars surpass western ones in blending three
critical aspects of mv production: quality, technology and cost. Now this has
been transited to electric vehicles where the critical component has been identified as the battery for
which neither EU nor US has an equivalent product.
3. China's electricity consumption increased 5% YoY
to more than one trillion kilowatt hour where the quantum used by industries compared
to domestic consumption has doubled to 10% YoY. In fact, according to IEA
report overall electricity consumption in China is greater than that of the combined consumption of EU, US and
India.
4. China holds an unshakable lead in manufacturing especially
in high-tech where scalability in processing has led to mass production of
items at affordable price to
cost ratio making Chinese products much sought after globally.
5. Turn out of STEM Graduates from China tops the
list with 3.57 million, India 2.55 million whereas USA has only 820,000. Within
STEM there are large number of engineers and computer scientists who are the bedrock of tech
progress of Chinese enterprises.
6. As regards to critical technology such as
batteries for both petrol driven and electric cars China beats both EU & US
hands down. Besides the
roll-out of 5G infrastructure in mobile communication as well as large
strides achieved in quantum computing allow China to have a better say in tech
war now and in the near future.
7. To cap it all comes the unveiling of the chip
war. Both Biden Presidency and now Donald Trump have unofficially declared chip
war against China. Nvidia which boasts the ultra-modern AI chip hardware such
as H100 and many others had the biggest market for her products in China where
tech companies such as Alibaba & Ten cent used these chips in their work processing.
At present Nvidia has
almost 90% of the global AI Chip market.
Result
US led chip war prompted Huawei to counter it in
one shot. Doubling her output of AI Chips, Huawei helped China to pivot away from American chips
on one hand and started to develop indigenous AI ecosystem within China on the
other. For all intents and purposes China was the biggest market for Nvidia.
Huawei need not compete in the global market against Nvidia. She can simply
produce latest AI chips for China alone and survive on the top slot.
My submission
Navigating business strategy amid geoeconomics mandates that US abolishes all export restrictions over Chip exports to China lest Nvidia with 3 Trillion USD market capitalization erodes her position as the Number one manufacturer of AI chips. Moreover, tech war is much worse than nuclear war. In the latter it is mutually assured destruction (MAD). In tech war only one party that would bite the dust. Your guess is as good as mine!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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