The Trump administration widened its dragnet this week on Chinese companies barred from selling to the U.S. or buying components from American firms in a push to slow China’s technological advances. After crippling Huawei Technologies Co., China’s biggest telecommunications company, the administration followed up by threatening to cut off U.S. components or software to five Chinese video surveillance firms. But the plan might backfire, because U.S. companies are so inextricably involved in the global technology supply chain. Concerns over Washington’s punitive measures and possible retaliation by the Chinese rattled markets throughout the week, hammering chipmakers and Apple Inc. It's 5G that embodies most of Washington’s fears -- by powering a wealth of upcoming technologies from self-driving cars to advanced medical procedures, the new wireless standard is set to be the backbone of the modern economy. Until recently, it seemed like Huawei, the world's biggest purveyor of communications networking gear and the second-largest smartphone maker, was leading in supplying that infrastructure.By cutting off the Chinese tech giant, the U.S. will only slow the expansion of 5G. That’s bad news for some of the most important U.S. companies, particularly component makers, that were banking on it for a major surge in orders starting this year.
Without China’s 5G network, consumers there won't buy new phones that contain chips from Qualcomm Inc. and Micron Technology Inc. They won't generate data that need to be crunched by processors made by Intel Corp., Nvidia Corp. and Advanced Micro Devices Inc. And there'll be no need for faster networking gear powered by chips from Broadcom Inc. and Xilinx Inc.“I don’t think it’s good for the U.S. economy,” said Minyuan Zhao, an associate professor of management at the Wharton School at the University of Pennsylvania. “With its strong institutions, the U.S. has long been an assuring force in the global supply chain. People don’t always trust China, but they consider the U.S. a trustworthy partner, if not guardian, of the global economic system.” If supply chains can be arbitrarily interrupted and that trust disappears, countries will start to develop individual systems and the result will be inferior and more expensive.
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