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Silicon Valley Unsure of Washington’s China Concerns

The stakes make it hard to predict how the U.S. and China will come to an understanding. In the meantime, Silicon Valley investors and entrepreneurs have accepted for now a cooling-off period for cross-border investment.

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Attendees pass by a Huawei booth during the 2019 CES in Las Vegas, Nevada, Jan. 9, 2019. VOA

They call it the Trump effect.

Increased government scrutiny of Chinese investments in Silicon Valley has meant some deals are not getting done. Some aren’t even considered.

Usually eager for money and tantalized by the prospect of the Chinese market, startups are even declining Chinese investment.

After years of growing ties between China and Silicon Valley, the U.S. tech capital sees itself caught between Beijing and Washington over which country will win the competition to create the next generation of communication technologies.

“China’s innovation efforts are broad and deep,” said Michael Wessel, commissioner of the U.S.-China Economic and Security Review Commission, at a recent congressional hearing. “China wants to be a global innovation leader and is doing all that it can legally and illegally to achieve its goals.”

A man checks his phone next to an advertisement of a new Huawei Mate X device at the Mobile World Congress in Barcelona, Spain, Feb. 26, 2019.
A man checks his phone next to an advertisement of a new Huawei Mate X device at the Mobile World Congress in Barcelona, Spain, Feb. 26, 2019. VOA

Flashpoint Huawei

Huawei, the Chinese telecommunications company that is building a 5G network in countries around the world, remains a flashpoint. Its chief financial officer faces extradition to the United States from Canada on fraud charges.

At the Mobile World Congress in Barcelona last week, U.S. and Huawei officials lobbied world leaders on whether Huawei should be trusted.

U.S. concerns about China and technology extend to the nation’s methods to achieve technology dominance, as outlined in Beijing’s Made in China 2025 plan.

In addition to subsidies for industry, and research and development, the U.S. says those methods include massive cyberhacking campaigns to steal corporate secrets, forced technology transfers to Chinese partners, and government policies that reward intellectual property theft.

Increased scrutiny of Chinese investors

The U.S. government wants new barriers up because it believes some technologies, such as artificial intelligence and robotics, are important to national security. But many in the tech industry see risks in new restrictions.

“By not working with China, not only do we have less access to information to what they are doing,” said Parag Khanna, author of “The Future Is Asian.” They will substitute us for more reliable partners and we will be cut out of the entire market.”

The race to build 5G

Chinese companies are racing to build 5G wireless communication networks around the world, which Washington says risks giving Beijing enormous opportunities for electronic surveillance.

The stakes make it hard to predict how the U.S. and China will come to an understanding. In the meantime, Silicon Valley investors and entrepreneurs have accepted for now a cooling-off period for cross-border investment.

The disconnect between Silicon Valley and Washington is hard to bridge, said Christian Brose, head of strategy at Anduril Industries, a Southern California tech company that works with the U.S. government.

Also Read: U.S. And China Close To Reaching Long Awaited Trade Deal

“When you have a conversation where one party sees China as an emerging national security challenge, and the other sees it as an emerging business opportunity, that’s just a fundamental clash of cultures and expectations that is difficult to reconcile, but I also think it’s not impossible,” he added.

While the two countries negotiate, Silicon Valley, caught in the middle, waits. (VOA)

Next Story

India Becomes the Second Largest Smartphone Market After China: Report

India surpasses US to become 2nd largest smartphone market

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The Indian smartphone market surpassed the US for the first time on an annual level. Pixabay

New Delhi: Riding on Chinese brands, the India smartphone market surpassed the US for the first time on an annual level and this is the latest science and technology news, becoming the second-largest smartphone market after China globally — reaching 158 million shipments in the calender year 2019 with 7 per cent (YoY) growth, a report from Counterpoint Research said on Friday.

While Xiaomi continued to be the top player with 28 per cent market share in the calendar year 2019, Samsung was second with 21 per cent and Vivo at 16 per cent market share, said Counterpoint’s ‘Market Monitor’ service.

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India has now become the second-largest smartphone market after China globally. Pixabay

“Although the rate of growth for smartphone market hit single digit for the first time ever on an annual basis, India is underpenetrated relative to many other markets with 4G penetration in terms of subscribers being around 55 per cent,” said Tarun Pathak, Associate Director, Counterpoint.

“Chinese brands share hit a record 72 per cent for the year 2019 as compared to 60 per cent share a year ago.

“This year, we have seen all major Chinese players expanding their footprint in offline and online channels to gain market share. For instance, Xiaomi, realme, and OnePlus have increased their offline points of sale while brands like Vivo have expanded their online reach with Z and U series,” said Anshika Jain, Research Analyst at Counterpoint.

Over the past four years, Xiaomi, Vivo, and OnePlus have grown 15 times, 24 times and 18 per cent, respectively.

“This highlights that OEMs are mature enough to capture next wave of growth and expand their operations in India,” Jain added.

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Although the rate of growth for smartphone market hit single digit for the first time ever on an annual basis, India is underpenetrated relative to many other markets with 4G penetration in terms of subscribers being around 55 per cent. Pixabay

Samsung shipments remained almost flat (YoY) while it has shown a 5 per cent (YoY) decline in 2019.

“This is for the first time Samsung transitioned to a completely new portfolio targeting different channels (offline with A series and online with M series). However, it needs to double down its efforts to keep the momentum going,” the report noted.

While the smartphone market registered YoY growth, the feature phone market witnessed a steep decline of nearly 42 per cent YoY in 2019 and 38 per cent (YoY) in Q4 2019.

Also Read- Amazon’s Music Streaming Service Hits 55 Million Subscribers Globally

“This is due to slowdown in the new shipments from Reliance Jio. However, the players such as itel, Lava, Nokia and Micromax registered positive annual
growth despite the overall segment declined showing the untapped potential of the market,” said the report.

In fact, itel emerged as the number one feature phone brand in Q4 2019, followed by Samsung and Lava. (IANS)