The Financial Times reports China’s decision to discontinue the use of Intel and Amd processors – as well as the Windows operating system and implicitly the software that needs it to work – from its civil services: China react to the technological ban with a blow to the solidity of US Big Tech. The analysis by Andrea Monti, Professor of Digital Law at the University of Chieti-Pescara – Initially published in Italian on Formiche.net
Technological independence has long since become an essential element of strategies for the creation of a multipolarity with the centre of gravity shifted to the Indo-Pacific region. In fact, while Europe is unable to find its own way to create an infrastructure totally independent of US technologies, countries like India are investing heavily in the creation of a national chip and processor industry, taking advantage, in terms of operating systems and applications, of the enormous versatility offered by the ‘open source’ (which it would be better to call ‘free’) approach.
Traditionally, the reasons for these industrial policy choices are based on the need to (re)take control over infrastructures that are critical to the functioning of a state: there is little point in having national(ized) software if they need hardware impossible to control. However, to compete with Western technologies, it is necessary to develop equally efficient ones, which requires time but above all access to top-level knowledge.
Industrial espionage aside, the only ways to access these resources are, in the short term, to buy them and, in the long term, to train scientists and researchers by sending them to study abroad and attracting foreign brains. This explains how the need to maintain a competitive and strategic advantage over emerging countries translates into Western countries resorting to the geopolitical leverage of export bans on certain technologies (and for some time now, visa denials to students and researchers from certain countries).
Over time, however, this advantage has waned if it is true that, despite US restrictions, Huawei has been able to produce 7-nanometer chips that have allowed it to challenge Big Tech on its own turf, even prompting Apple to apply an unusual discount policy to the Chinese market for its iPhone product line to counter declining sales.
The news is more important than it seems because it is not simply about fluctuations in the market share of a consumer electronics manufacturer. In fact, the message sent with the release of sophisticated chips and the banning of AMD/Intel/Microsoft from the civil service infrastructure is clear: China does not have (yet and at least on a mass level) similar or superior technologies to those in the West, but it has reached the point where it has enough of them to start competing head-on in the market and not only in terms of sales.
The economic consequences of the Chinese strategy for the US Big Tech companies involved – as some analysts have pointed out – will in fact translate into a significant reduction in sales, with effects that are difficult to predict at the moment. Certainly there will be no catastrophic consequences in the short term, but the Chinese choice to move towards hardware autonomy may be an indication of the reaction to Western policies of technological containment, based on the weakening of leading US industries through the prohibition of access to the domestic market.
To date, these restrictions only concern Chinese government systems, but if they were to extend to the entire market, and if they were to be adopted also by other states (for instance, by those of the Brics, on the basis of technological cooperation agreements), the scenario could change significantly, especially if a further – and irreversible – step were to be taken on both sides, i.e. to intervene directly on technological standardisation, network interconnection, and the governance of the Big Internet.
So far, in fact, the dispute between the two blocs has not (yet) called into question, for instance, the format of files used by computer programmes, the data transport system on international routing (although policies on submarine cables and routing are moving in this direction) or the infrastructure of internet governance based on transnational NGOs such as Icann or Ripe.
If this were to happen, we would be facing a new Iron Curtain that would prevent Western companies from accessing Chinese manufacturing capacity with a devastating economic impact, at least in the short term. Once again, and in more general terms, the issue of the (feasibility of) relocation of production capacity within Western borders and the need to prevent new industrial partners in the Indo-Pacific area from also turning from suppliers into competitors emerges in all its criticality.