Asian Edge

On the Frontline of the ICT World

US-China trade war: Looming conflicts, grave consequences
Taiwan, situated along the first island chain plays a vital role in the worldwide ICT supply chain, but is also the weakest link from a geopolitical perspective
Analyzing the major changes in the IoT era based on the observations and meticulous collection of figures

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The frontline of the US-China trade war actually lies along the first island chain in East Asia where IT powerhouses Japan, Korea and Taiwan are key members. The US is imposing extra tariffs on Chinese imports, sending many manufacturers scrambling to relocate their production from China to ASEAN, South India, Taiwan and even the US. The US-China disputes are turning businesses into trade refugees.

The US relies heavily on Japan, Korea and Taiwan to contain China. But will Japan, Taiwan and Korea, all of whom now boast their own cutting-edge technologies, completely submit themselves to the US, or will they have their own hidden agendas devised to please both superpowers? The predicaments and strategies of Japan, Korea and Taiwan – scrutinized from an Asian perspective – may serve as lessons that other emerging countries can learn from.

Preface
Prologue
  • Chapter One: The World Singing Out of Tune
    • I. Intensifying conflicts
    • II. Echo from the black hole
    • III. China says no to US monopoly
  • Chapter Two: Fight On The Frontline
    • I. Chinese handsets sweeping global markets
    • II. Undercurrents of the car industry
    • III. Who is thrown into the battle?
    • IV. The winds of change in the semiconductor sector
    • V. Examining China's Big Fund
  • Chapter Three: The East Asia Island Chain
    • I. Korea undergoes drastic changes
    • II. When it rains, it pours: Japan seeking a new direction
    • III. The boiling frog: How does Taiwan stage a comeback?
  • Chapter Four: My Silk Road Journey
    • I. India changing for the better
    • II. The ambition of Vietnam
    • III. Trip to Armenia
    • IV. Keep ASEAN on the radar
    • V. Opening the doors to emerging countries
  • Chapter Five: The World Divided Again
    • Scenario 1: Party-state capitalism sweeping the world
    • Scenario 2: New world order led by the US
    • Scenario 3: What Taiwan and Korea can do in US-China stalemate
Epilogue: Farewell to Morris Chang

The China government’s Made in China 2025 initiative puts semiconductor above all else. The trade deficit in semiconductor – which amounted to US$227.4 billion in 2018 – is a key issue that China has to tackle. China accounted for nearly half of the consumption in the worldwide semiconductor market in 2018. However, none of the world’s top 15 semiconductor firms are from China. Huawei, Lenovo, BBK and Xiaomi together purchased US$60 billion worth of semiconductors, securing their positions among the top-10 buyers. If US firms cut their supply, these Chinese vendors’ hands will be tied. That is also why the US government is using semiconductor as a way to counter China’s expansion.

China is anxious to catch up while the US is making every effort to block China’s expansion. Much to the surprise of Asian companies and governments, who were focused on their own business, the Trump administration launched a trade war against China in the summer of 2018. Underneath the US government’s attempt to narrow the trade deficit with China by imposing 25% tariffs on US$200 billion in Chinese imports is a strategic move to build up a high trade barrier and control the export of US patents, technologies, materials and equipment, using them as weapons in the war against China.

Of course, China will not sit still but rather it is attempting to drum up support from neighboring East Asian tech powers including Taiwan, Japan and Korea. With their leading-edge manufacturing industries including the semiconductor sector, Taiwan, Japan and Korea face a dilemma in terms of their choices of market, and they have even become buffer zones in the US-China conflicts in terms of technology, economy and politics. Similar to the Russo-Japanese War (1904-1905) in Manchuria and the Korean War (1950-1953), where two great powers engaged in battles on the fields of neighboring countries, history is repeating itself now only in a different form of war. The US-China fight at the expense of Japan, Korea and Taiwan, with the latter two smaller countries being the first to bear the brunt of their trade spat. Countries often have to deal with political conflicts simply because of their geographical locations. For the past century, such situations have come and gone like the monsoon season, reshuffling international relations again and again.

Morris Chang, Founder of TSMC
The Internet has brought about revolutionary changes, redefining the relationships between the supply and demand sides of the industry. In a new world order that is being reshaped by the US and China, Taiwan occupies a crucial place along the East Asia IT island chain, with its semiconductor industry playing an all-important role.
Yvonne Chiu, Chairperson of WITSA
Colley Hwang's keen observations will allow emerging countries to know that there are angles and choices other than the ones dictated by the US and China.
Chi-Foon Chan, Co-CEO of Synopsys
This is a book that is very relevant to this age of Moore’s Law, US-China trade relationships, and high-tech industry evolutions. It is insightful and should be of interest to technologists, economists and anyone concerned about how the high-tech industry of semiconductor intersects with the geo-political environment worldwide. In other words, if you are interested in high tech, such as smartphones, 5G, semiconductor, AI, and autonomous cars; or if you are concerned about the role of the US and the Asia Pacific ecosystems (Korea, Japan, Taiwan, China, India…), then this book is for you.

Colley Hwang

Colley Hwang is a veteran ICT industry analyst with 34 years of experience. He has witnessed the evolutions from PC to mobile communication in an ICT world that is now ready to embrace IoT, 5G and AI. He is the founder and president of DIGITIMES, which is dedicated to reporting ICT industry news. He has been a frequent speaker at universities in Taiwan and at many other events. He has written several insightful books about the trends of the ICT industry.

He is adviser to Taiwan's Ministry of Economic Affairs, the city government of Taipei, the county government of Yilan and Sinocon Industrial Standards Foundation. He used to lead Taiwan's Market Intelligence & Consulting Institute (MIC) and has been on the boards of directors at several enterprises and organizations including WPG Holdings, Taiwan Taoyuan International Airport, China Aviation Development Foundation and TAITRA. He has lived abroad in South Korea and the US for several years and visited many major cities and firms in China, Europe, North America and Asia Pacific.

He has given lectures and speeches about industry trends at many first-tier international ICT firms including Microsoft, TSMC, Foxconn, AUO, UMC, Acer, Lenovo, Samsung, Huawei, BOE, Applied Materials, Synopsys, Rohm and Epson. He is one of the most experienced industry experts and business managers in Taiwan.

DIGITIMES, which Hwang founded in 1998, provides comprehensive coverage of the IT industry, offering timely updates of almost 100 stories daily, as well as research reports and consulting services. Its Chinese- and English-language websites are reliable sources of information about the IT supply chains in the Asia-Pacific area, particularly in Taiwan. DIGITIMES has more than 40,000 paid members and more than 150,000 subscribers to daily newsletters. DIGITIMES is a cross-platform service provider that also organizes more than 130 forums and seminars a year.