Activist Approach Aims at Communications Network Supply Chains and Semiconductor Development; Bipartisanship Appears Feasible
The November 2020 election of Joe Biden to become the 46th President of the United States is having a number of sweeping effects. The most crucial one relates to the COVID-19 pandemic: Biden’s team has changed both tone and policy, and launched an aggressive, coordinated rollout of vaccines across the US population. Biden’s election will also have important impacts on communications network infrastructure markets, in at least two important ways.
First, US policy will continue to restrict much of the Chinese technology sector’s access to US supply chains; the US government will aim to minimize deployment of Chinese technology in both US communications networks and those in allied countries; and, US policy will support alternative technologies and companies that can help smooth the transition away from China. Implications: Huawei will see market share in the telecom sector decline markedly over the next 2 years; China will push harder on its own allies to purchase Huawei/ZTE gear; Huawei and ZTE will emphasize services and software more, and hardware less; China will explore many ways around the rules but see limited success without crucial chipmaking technology; Open RAN will see an accelerated adoption curve; US companies like Ciena, Cisco, and Infinera, and others (e.g. Fujitsu and NEC), will see telecom opportunities pick up significantly in 2H21 and 2022.
Second, the US will actively support the development of a semiconductor supply chain with more firm roots in the US mainland, and also aim to offset the growing global dependence on a single contract manufacturer (foundry), Taiwan-based TSMC. Implications: China will accelerate development of its own chipmaking industry and simultaneously use all means of political persuasion and bullying to bypass supply chain restrictions; Chinese hacking of the semiconductor sector will be more vigorous and aggressive than usual, both aimed at theft and at sabotage; China’s threats to invade Taiwan will get increasingly boisterous but not result in invasion through at least November 2022, instead remain aimed at extracting concessions; Intel and, to a much smaller extent, Samsung will benefit as the apparent risk of over-reliance on TSMC becomes clear; both US and European governments will focus R&D efforts at supporting alternatives to TSMC.
Table of Contents
- Huawei likely to fall below 20% share of telco network infra market in 2021
- US is poised to support semiconductor supply chain in big ways
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Figure 2: Top 25 vendors in Telco NI Hardware/Software*: Annualized 3Q20 Revenues (US$B)
Figure 3: Price change for key chip players and NASDAQ, April 5, 2019 - March 15, 2021
- Advanced Micro-Fabrication Equipment
- AGCU Scientech
- Aksu Huafu Textiles
- Applied Materials
- Arm Ltd.
- Beijing University of Posts and Telecommunications
- Beijing Zhongguancun Development Investment Center
- China Communications Construction Company
- China Electronics Technology Group Corporation, 7th Research Institute (CETC-7)
- China National Aviation Holding
- China State Shipbuilding
- CloudWalk Technology
- Commercial Aircraft Corporation of China
- Dahua Technology
- Deep Network Vision
- Deutsche Telekom
- Federal Communications Commission
- Global Tone Communication
- Gowin Semiconductor
- Grand China Aie
- Guangzhou Haige Communication Group Co., Ltd.
- Hangzhou Hikvision
- Lam Research
- Luokong Technology
- Megvii Technology
- QQ Wallet
- Semiconductor Manufacturing International Corp (SMIC)
- Sense Time
- Shenzhen Net Vision
- Taiwan Semiconductor Manufacturing Company (TSMC)
- Tencent QQ
- Tianjin Broadcasting Equipment Co., Ltd.
- US House Intelligence Committee
- US National Security Commission on Artificial Intelligence
- Vodafone Idea
- WeChat Pay
- WPS Office
- Xiamen Meiya Pico
- Xinjiang Uighur Autonomous Region People’s Government Public Security Bureau
- Yitu Technologies
- Yixin Science and Technology Co. Ltd.
- Zhejiang Dahua