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Time of India
5 days ago
- Business
- Time of India
Apple can inch toward India and Vietnam, but it can't leave China, with or without tariffs
HighlightsApple Inc.'s technology transfer to China has significantly contributed to China's emergence as a leading global tech power, as detailed in Patrick McGee's book. The manufacturing ecosystem that Apple built in China, characterized by skilled labor and efficient production, is unlikely to be replicated in the United States despite political pressure from former President Donald Trump. Apple's reliance on China for high-tech manufacturing poses a strategic challenge, as the company faces increasing competition from homegrown firms like Huawei Technologies Co. During US President Donald Trump 's first term, he famously toured a Texas factory and claimed credit for bringing Apple Inc . production back to America. Except the plant had been running long before he took office. And it was an 'unmitigated fiasco.' Workers in China had to be flown in to help fix the mounting manufacturing issues encountered in the US heartland. This telling anecdote from Apple in China, a gripping read by former Financial Times journalist Patrick McGee, shows how the tech giant became beholden to America's biggest geopolitical adversary. Up until this point, the book recounts how Apple flew engineers from California to China to train and collaborate with local workers to manufacture its most iconic products. Now, it seems, the tables have irreversibly turned. McGee argues that the technology transfer facilitated by Apple to China, via small decisions compounding over decades, ultimately made it the biggest corporate investor into Made in China 2025, President Xi Jinping's bold plan to end reliance on Western technology. 'Here was America's most famous tech giant volunteering to play the role of Prometheus, handing the Chinese the gift of fire,' McGee writes. Yet the overarching argument of the book — that the US company made China into the tech behemoth it is today — begs the question of why Apple didn't make the same kind of investment in the US. And amid Trump's second term, when he has repeatedly threatened tariffs on the company if it doesn't onshore manufacturing, this query has new urgency. But the reality is that Trump's nagging will never be able to recreate the ecosystem that local governments in China, with the help of Taiwanese suppliers such as Hon Hai Precision Industry Co., created to lure Apple. A simplistic answer from a scholar early in the book is that China was a 'low wages, low welfare and low human rights' nation. Suppliers could exploit a massive underclass of migrant workers, and local authorities could quickly suppress any labor unrest or media reports of it. If there were any voices I wanted to hear more of in the book, it wasn't the dozens of Cupertino, California, engineers but these Chinese workers who turned Apple into the $3-trillion-dollar company it is today. (Apple has publicly called claims in the book untrue and full of inaccuracies.) But if there's a lesson for Trump — or American consumers — here, it is that electronics manufacturing jobs can come at a high cost for workers. It's hard to imagine that these are the kinds of positions Trump's base is hoping for, in an area where automation would be welcome. China is hardly a low-wage manufacturing base anymore. Apple Chief Executive Officer Tim Cook acknowledged this before, saying that his company produces in the country not because of labor costs but because of its legions of skilled workers. McGee argues that this upskilling is now being used to fuel innovation at homegrown tech giants such as Huawei Technologies Co. — and a direct result of Apple's investments. While the iPhone maker was chasing short-term profits, savvy suppliers in Asia were playing the long game. We've all heard about the legendary union between founder Steve Jobs and designer Jony Ive that made the iPhone a unique product. But the partnership that made it a revolutionary one, owned by more than a billion people, was between Cook and 'Uncle Terry,' McGee argues. Terry Gou, the founder of Hon Hai (better known as Foxconn), was the hyper-efficient manufacturing genius who brought the iPhone to the masses. Gou was described as obsessed with cutting costs — even if that meant diluting hand soap in factories with increasing amounts of water. One source in the book described him as worth billions in 'nickels and dimes.' But Gou recognized the value of working with Apple wasn't just profits: It was the tacit knowledge that he and his team would receive from the engineers shipped over from California to help set up and run the factories. This learning was invaluable, Gou understood, and made even losing money to get Apple orders worth it. Ultimately, the high-tech manufacturing ecosystem built up in China took decades, marked not just by the factories producing its iconic goods but by the creation of sub-suppliers nearby and an army of skilled engineers. It will be nearly impossible for Trump to try to recreate this during his four-year term. The US could start by focusing investments in vocational education and engineering, but policymakers should recognize that catching up now requires a strategic long game. And all the years it took to develop a reliance on China means it's not Trump's tariff threats that pose the biggest existential threat to Apple. It's Beijing. Uncoupling too fast risks angering local authorities, but not doing so quickly enough makes it even harder for it to inevitably be done. As this book convincingly argues, Apple can inch toward India and Vietnam, but it can't leave China anytime soon.
Straits Times
21-05-2025
- Business
- Straits Times
Malaysia's PM Anwar says US trade talks unaffected by China ties
Malaysian Prime Minister Anwar Ibrahim said the US pledged to 'sympathetically' review its appeal for lower tariffs. PHOTO: EPA-EFE PUTRAJAYA – Malaysia's Prime Minister Anwar Ibrahim said the US pledged to 'sympathetically' review its appeal for lower tariffs even as the South-east Asian nation seeks to strengthen its ties with Washington's top competitor China. Datuk Seri Anwar heaped praise on President Xi Jinping during his state visit to Malaysia in mid-April and signed 31 agreements, about a week before Malaysia started talks with US trade representatives over tariffs. 'At the height of this negotiation with the United States, we welcomed President Xi Jinping. We have no qualms about it,' Mr Anwar said at a briefing in the administrative capital of Putrajaya late on May 21. 'We were glad that he was never raised as an issue with the United States.' Malaysia is negotiating with the US to bring tariffs on its exports down to zero, from the 24 per cent imposed by President Donald Trump. In return, Washington wants Malaysia to address trade imbalances, non-tariff barriers and safeguard US technology from being channelled to other parties and investments. 'The United States has promised to look at it sympathetically and review and keep us posted,' Mr Anwar said of Malaysia's proposal. Malaysia, which helms the Association of South-east Asian Nations in 2025, will hold an inaugural summit next week that brings together that regional group, along with China and a key bloc of Middle East states. Chinese Premier Li Qiang will be in Kuala Lumpur for the event. Malaysia this week found itself entangled in one of Washington's disputes with Beijing. The South-east Asian country announced it will build the first-of-its-kind AI system powered by Huawei Technologies Co chips, but then quickly distanced itself from that statement a day later. Malaysia's Ministry of Investment, Trade and Industry disavowed the project, saying it was privately driven. 'As a policy, we made it very clear we are fiercely independent,' Mr Anwar said. 'We want what is best for our country.' BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Bloomberg
15-05-2025
- Business
- Bloomberg
China Accuses US of ‘Unilateral Bullying' on Huawei AI Chips
Beijing has pushed back against a US decision aimed at curbing Chinese-made artificial intelligence chips, a first sign of discord between the world's two largest economies since they agreed to a trade truce last weekend. In a reminder of the tensions that continue to exist between the Trump administration and China when it comes to technology, the Commerce Department said earlier this week it would issue guidance to make clear that using Huawei Technologies Co. 's Ascend AI chips 'anywhere in the world violates US export controls.'
The Star
14-05-2025
- Business
- The Star
Can Huawei break the Mac-Windows duopoly?
IN the latest sign that US attempts to choke Huawei Technologies Co are only strengthening it, the Chinese tech giant will next week release its first line of personal computers (PCs) powered by the homegrown HarmonyOS operating system (OS). The move to challenge the global duopoly overseen by Microsoft Corp's Windows and Apple Inc's MacOS was not by choice. Huawei's licence to run Windows on PCs expired in March, and America's blacklisting makes it difficult for US firms to continue to do business with it. Instead of succumbing to Washington's squeeze, Huawei has invested heavily in the nearly impossible task of creating an entirely new software ecosystem from scratch. It will be an uphill battle for HarmonyOS to make a dent, both in China and globally. The first computers run by Windows or MacOS were released in the 80s and are the foundation – and essentially only options – for most applications and services that PC users rely on. The diffusion and adoption of a new operating system doesn't happen overnight. But if Huawei can succeed in getting developers on board, it has a shot at providing the first real alternative to this two-party standard and offering a Chinese alternative that could eventually erode the long-term influence of Silicon Valley. The new PCs follow the remarkable gains made by Huawei's OS for mobile over the past couple of years, unseating Apple's iOS in domestic market share at a rapid clip. In early 2023, HarmonyOS's operating system had just 8% of the mobile market in China, compared to the 72% held by Alphabet Inc's Google-backed Android and iOS's 20%, according to Counterpoint Research. In the last quarter of 2024, however, HarmonyOS commanded 19% – surpassing iOS's 17% and pushing Android's share down to 64%. There are other elements on its side. Huawei's homegrown OS aligns with President Xi Jinping's goal of tech self-sufficiency, meaning it can likely count on government support to boost adoption. China has a vast domestic market, which means there's less pressure on Huawei to rely on the United States or foreign consumers as it works out any kinks. The trade war is pressuring many Chinese to back domestic brands over American alternatives. Huawei's hardware empire also gives it a built-in userbase to tap. The company's strength still largely lies in mobile devices, but it was second only to Lenovo in PC market share in China last year. Still, headaches were reported with the mobile version, especially related to accessing certain apps that were specifically built for Android or iOS. Splashy demo videos make the first such PC look like a sleek MacBook, but it's going to take years for programmers to build out all the applications and products users have grown accustomed to, from Microsoft's Office suite to Mac's FaceTime. By far the biggest challenge, across all devices, remains convincing developers to get on board. China's vast pool of engineers gives it an advantage, but Huawei must aggressively incentivise them to build services specifically for HarmonyOS. It has made some strides. Huawei says that the first lineup of these PCs has built-in artificial intelligence (AI) features, including DeepSeek-powered apps. State-backed media has reported that they have more than 150 dedicated applications, as well as being compatible with a range of popular Chinese platforms available on mobile. In its annual report last year, Huawei said that over a billion devices – including phones, tablets and smartwatches – are already running HarmonyOS. And Huawei has previously signalled global ambitions for its operating system, coinciding with its devices' increasing popularity across South-East Asia and emerging markets. A lot of attention has been paid to Huawei's rise in the hardware sector, and specifically its advances in chipmaking for AI applications. US efforts to ban advanced semiconductors from China have no doubt slowed AI ambitions. But they have also accelerated Beijing's development of a domestic and self-sufficient ecosystem. Most recently, America's bar on Nvidia Corp's H20 chips has been criticised for redirecting demand and money toward Huawei's alternatives. The proliferation of Huawei's HarmonyOS now makes it clear that we're seeing a similar scenario play out in China's software sector. Washington should assess how its policies have resulted in Huawei growing into the behemoth it is today. The ramifications extend far beyond potential impacts to US businesses. In an increasingly bifurcating tech world, Beijing could eventually end up setting the norms and standards that the rest of the world adopts, whether that's in AI or operating systems. — Bloomberg Catherine Thorbecke is a Bloomberg Opinion columnist covering Asia tech. The views expressed here are the writer's own.
Business Times
21-04-2025
- Business
- Business Times
Nvidia chips don't belong on the bargaining table
News that Nvidia Corp will not be able to sell its customised artificial intelligence (AI) chips in China caught both the company and markets by surprise. The disclosure came just a day after Nvidia announced a half-trillion-dollar US investment commitment that was celebrated by President Donald Trump, and followed a media report saying that chief executive officer Jensen Huang had struck a deal safeguarding the H20 chips in China over dinner at Mar-a-Lago. The confusion represented what is now a usual day in Washington as Trump plays out his chaotic trade games and increases pressure on China to negotiate. Beijing, meanwhile, has signalled that one of its chief concerns heading into potential talks are US policies designed to suppress its modernisation. The scene is now set for Nvidia's H20 chips, made specifically to comply with export controls, to be turned into the ultimate tariff-related bargaining point. An exemption would please the company, which has long argued that export controls are ineffective and give a boost to domestic players including Huawei Technologies Co. And while Beijing is not backing down, access to AI chips is one thing it desperately wants. We have seen Trump blur the lines over tech national security concerns in the past. The various export controls on Nvidia predate his tariff blitz, and are meant to hold China back in the AI race over fears that Beijing's edge could give it military or economic advantages. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up But the president has ignored similar worries before: he extended a deadline for TikTok to be banned in the US, turning the China-owned social media platform into a key leverage on tariffs. The White House may yet roll back the crackdown on AI chips in China. Regardless, it is a timely reminder that this trade war is risking America's hard-won gains in the race for tech supremacy. Washington cannot fight on two fronts. Access to chips and computing power has been at the core of Silicon Valley's lead over China in AI, but that gap is closing fast. Washington's tightening chip restrictions have been porous, but they have no doubt bought time. One thing we have learnt is that they are ineffective without international cooperation. The US had to convince the Netherlands and Japan, key allies who oversee parts of the semiconductor supply chain, to get on board for these policies to have a fighting chance at holding Beijing back. But Trump's 'America First' rhetoric and tariff antagonism do not provide much incentive for joint action any more. DeepSeek, the Hangzhou-based AI startup that surprised the world earlier this year, shows that China is not as far behind on AI software development as many in the West thought. America's key lead now remains in hardware and namely, advanced chips. But the likes of Huawei and Semiconductor Manufacturing International Corp are working around the clock to produce domestic alternatives to Nvidia's AI processors. Some analysis suggests that these local players are just a couple of years away from creating viable home-grown Nvidia alternatives to power China's AI boom (while still having dramatically lower performance that Nvidia's top-of-the-line offerings). This means that the window for how long these export controls can still have any impact is closing fast. Perhaps the biggest indication that these chip restrictions have slowed China's AI ambitions, even if they have not stopped it, has come from DeepSeek founder Liang Wenfeng. In a rare interview, he said that the biggest barrier for his company was not money, but access to high-end chips. And these H20s are still in high demand: Chinese tech giants including ByteDance, Alibaba Group Holding and Tencent Holdings have reportedly stockpiled orders in the first three months of this year, in preparation for the long-rumoured crackdown. Much of the recent coverage of the latest Nvidia curbs frame it as more evidence that multibillion-dollar dealmaking with Trump offers no guarantees of tariff reprieve. But the reality is the chip war predated this trade war, and blurring the lines risks losing both. Nvidia's AI chips should not have been turned into pawns. But they are increasingly looking like the biggest concession Trump now has to get himself out of the chaos he has unleashed. BLOOMBERG
