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Asking for trouble

23 May 2019

First of all it was Google denying Huawei its Android OS and related services.

Now, it seems that ARM is breaking ties with the Chinese electronics giant.

All of this is, of course, at the behest of the US government and is primarily driven by President Trump.

Huawei's response to the Android situation was to state that they've got their own mobile OS ready to roll out as a replacement -- but what can they do if ARM refuses to supply the licenses for processors that have become the heart of almost every smartphone on the market?

Despite their size and might, I wonder if Huawei are in a position to design a functional equivalent of the ARM devices within acceptable timeframes?

It would seem that Huawei has a real problem now.

If memory serves me correctly (which it likely doesn't), I seem to recall that ARM is based on the semi-RISC 6502 chip of the 1980s and thus, although ARM itself is a UK-based company, its products have what they're referring to as "US origin technology". Based on this assertion, ARM believes that it is therefore bound by Trump's embargo against the supply of such tech licenses to Huawei.

What a messy situation for all involved.

My own concern is that, at some stage, the Chinese government might decide they've had enough and start reacting in unpredictable and undesirable ways against the USA.

China has a pretty good trade surplus with the USA, reportedly reaching US$35.5bn late last year. One can't help but wonder therefore, what would happen if China suddenly decided to stop supplying its plethora of low-cost products to America.

Huge US companies such as WalMart, Target, Macey's and a raft of others would suddenly find themselves out of stock and forced to find alternative suppliers, probably at a much higher price. I suspect that the US public would react very strongly against their basic cost of living being hiked by such a degree -- even if it meant more jobs for Americans due to increased domestic production. In fact, the US economy doesn't have much reserve capacity right now, with unemployment rates having been falling steadily for the last decade or so and now reaching just 3.6%.

If Trump wants a trade war, he might just get it but, unfortunately for him, the public's reaction to shortages and price hikes might be the very thing that sees him kicked out of the White House.

Also, never underestimate the Chinese ability to innovate and quickly roll out new products these days. The era when China just stole and copied Western product designs is all but over. Today, some of the best products coming out of that country have been conceived, designed and manufactured completely within China. I'm pretty sure that if they wanted to, they could knock out a pretty capable competitor to the ARM SOC devices in a timeframe that might surprise everyone. They have the fab plants and I suspect that existing licenses will see them through until the next round of CPU designs come from ARM themselves.

Will that give them sufficient time to "roll their own" CPU architecture?

Or might they just pirate rather than license, if licensing is no longer an option?

Don't forget, they've just recently landed a rover on the moon -- whilst the USA is still only talking about sending stuff in the next five years or so and Boeing still grapples with the task of keeping its 737 Max8 airliners from falling out of the sky.

If there are going to be any winners out of a protracted trade war between China and the USA then it will be the up and coming economic powers of India, Indonesia and such. These countries are just finding their feet and still have one benefit that China is rapidly losing -- very cheap labour. I'm sure there are plenty of manufacturers in these countries that would love to step in and deliver teeshirts, shoes and other products to WalMart, Target, etc -- at prices little different to those which bear the "Made in China" labels.

So it's "interesting times" ahead.

What do readers think? Where will this all end?

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