U.S. sanctions aside, Huawei is able to completely change the usual picture of the world. It is a mistake to believe that behind the mere desire to adjust the local presence of some very big, but a direct competitor to private technology companies. And so we should not think that only Huawei is a threat to one government.
Market economy in the IT no longer exists
About 10 years ago I was present at one government meeting, which seriously discussed the threat of the presence of adocumentary opportunities or so-called bookmarks in procurement programs. Then this threat seemed questionable, and that foreign software producers can suddenly discontinue the sale or support of their decisions in Russia — nobody believed it.
What then seemed an impossible scenario, has now become real. We have become heavily dependent on manufacturers: the lack of updates can hurt more than any tab. For example, Huawei, we have witnessed a direct confrontation between the state and business when President of the United States actually prohibits the activities of one of the largest manufacturers of Telecom equipment, real American competitor Cisco.
After the American government to refuse to work with Huawei and steel commercial structures. First, Google made a personal injunction and blocked access to the Huawei Android platform and all related services. Then, Intel, Qualcomm, Broadcom and Xilinx announced the termination of cooperation. According to Nikkei Asian Review, the shipment of chips for Huawei prepares to stop and the European Infineon Technologies. In fact, the introduction of the particular company in the black list similar to the action of sanctions.
The current duopoly of Apple’s iOS and Google’s Android on the mobile market needs to change. From a business point of view it is simply impossible to imagine that Korean, Chinese, or any other company will be so dependent on the us mobile operating systems. What happened now with Huawei is, in fact, a complete ban on the production of smartphones and tablet-specific Chinese company.
By the way, protectionism and previously existed in Europe and the United States in many areas — including in the field of software. He was just not so clear — outright bans on buying anything foreign for state needs simply did not exist, due to the fact that this is difficult to implement. For example, in France, despite the absence of direct prohibitions, foreign companies are almost impossible to become a supplier of solutions to government agencies.
To understand the scale, imagine if the Russian import substitution occurred in the same scenario, the decision of our government to do would be not to limit the purchase of, and right to ban the activities of Microsoft in Russia. Or Cisco. This is the fundamental difference — after 5 years we came to understand that the one who is often considered an apologist of the market economy, in fact, tighten the screws much stronger, using non-market methods.
Pandora’s box was opened, but no one knows what to do next
The American position is not a momentary whim. In September 2018, was approved cybersecurity strategy of the United States. Assistant to the President for homeland security John Bolton said at the time that
“…the basic element of [the strategy] is to seek peace through the use of force. We identify, oppose, destroy, decrease the level and restrained such behavior in cyberspace, which destabilizie and contrary to international interests, but try to provide US the conservation benefits in cyberspace.”
In other words — the us government has the right to prohibit the use of information technologies in any country or company, if it leads to termination of U.S. dominance in this area. In this perspective, today’s sanctions against Huawei is not caused by the alleged “bookmarks” (undeclared) in the equipment, endanger national security, but a very real technology behind IT-giant and the unwillingness to lose its position in the international arena.
Huawei is the only company that has full line of 5G devices and actual sales. The network of the fifth generation is the main transport for the IoT, and now Huawei is a global monopolist in this market. It is obvious that the decision to ban in the U.S. postpone the global transition to a 5G network by at least 1.5-2 years, and it is possible — and much longer. Russia, too, need to think about these risks. But even this is not the worst — the us administration will not stop and will continue to enter limits for other foreign companies operating in the U.S. market.
Was there a “bookmark” and are they so terrible
To talk about undocumented features, with the same success that the debate about life on Mars. Maybe, maybe not. Nobody will give you a definite answer. Will Americans defend their government structure from foreign technology, which is able to spy in favor of other countries? Probably not — indulging in the dissemination of architecture and unsafe decisions, the Americans fell into the trap that they themselves created.
For example, as part of any modern computer based on Intel is officially documented by the manufacturer remote control Intel M. It is waiting for commands from the outside, and when you receive — access to a computer and placed on it the data you receive from a third party. This mechanism is in any Intel. This is a separate module which is equipped with a RISC processor, operating system, Minix and TPM-platform (Thrusted Platform Module chip, which allows RAID to encrypt traffic). This module is located before all other systems, even to block the power of the processor.
The brilliant people who designed the current IT-architecture of the world, even decades ago, made a very convenient structure for total control. No need to build the illusion of total control exists, and has long been used. But they forgot that the medals exciting competition “missile, projectile, armor” is always two sides.
Sanctions against Huawei no nothing — just there’s no technique, which by default contains “bookmarks”. The same Cisco studied far and wide — found it slow at times not corrected for months, and even years. And the situation with the undocumented use of technology, especially in the context of national security, will not be solved by a ban on the activities of Huawei in the United States. Just other companies who want to hide the new “bookmarks” will have to exert a little more effort.
You need to understand that much of the equipment is done in China, and the history knows many examples, when manufacturing the boards, there were devices that were not in the design documentation. Moreover, there are even cases of appearance of additional blocks in microprocessors. And unbeknownst to the manufacturer, the kernel of this processor gets a few hundred thousand extra transistors, which perform quite specific tasks.
The only solution is to eliminate the factor of having “bookmarks”, we must return to deglobalization. That is, we must return to a situation where everything critical is done under his own control on the same plant in the territory of their country.
As de-globalization will affect the world economy
According to research Agency Frost & Sullivan, the global market for microelectronics in 2018 amounted to $369 billion Any action to protectionism and the transition to a de-globalization will lead to a significant reduction of cash flows. Asia will be lost due to abandonment of production, Western Europe and the United States — because of the need to re-create their own production, and these costs will cost much more than possible losses from the “bookmarks”. We can talk about significant dozens and perhaps even hundreds of billions of dollars.
IT-giants will be forced to significantly increase their spending on wages of qualified staff, but also to invest large sums in new factories. For example, the average salary of collector at the factory, located in China — $300-400. In Europe, the same for the same work will have to pay at least twice.
The construction of new production capacity is also not cheap. For example, the creation of a new factory Intel spends on average $6-8 billion, And that’s just one American company. Today Intel Fab out of the nine only three are in the territory of the United States. The flagship of the American IT economy, Apple has only one American production — the rest of the products are assembled in China.
What kind of response should we expect from China
Clear antagonist Huawei is of course Cisco. In conflict, there is a frontal clash of interests of companies in the field of production of telecommunication equipment and servers. And the prohibition of Huawei in the United States is unlikely to lead to the collapse of the Chinese company — it will be able to compensate for losses from the closure of the American market in other countries.
The same situation was with the Russian “Kaspersky Lab”, whose products came under unjustified bans in the United States and Europe in 2017 or 2018, imposed without any proof of involvement. The scandal, however, went in her favor — losing 20% in the U.S. market, the company has doubled its performance at the expense of markets and the Middle East and Europe, where the prohibition was soon removed.
China always makes innovative moves. To expect a symmetrical response, perhaps not. The reaction is accurately followed, and its size will be comparable for the money. Some experts reasonably believe that will fall under attack by Apple. But I don’t think that China will dare to unleash such a war. First, Apple needs to China, there is huge money going into the country in the form of payment of production and guarantee employment jobs in enterprises. And secondly, Apple is working in that niche, where the Chinese are not yet serious players.
The probability is that the actual Chinese response to the decision of the administration trump will be sanctions against Boeing. China is the biggest customer of this company, but now he has like a flying aircraft of its own production, and the joint project of the new liner.
Can Huawei to pose a threat to Russia?
It is obvious that Russia is a big and interesting market for Chinese Telecom giant. In profile committees of the Russian state agencies have repeatedly discussed the possibility of establishing a joint venture with Huawei was raised even questions the construction of new production enterprises in Russia.
But before getting seriously involved in such a substitution, we need to ask ourselves a rhetorical question about life on Mars and to define the position: if the equipment is Huawei “bookmarks” or not. I would like to understand how our government plans to guarantee that every foreign device vendor to localize its plant on the territory of the Russian Federation has no hidden features. In this sense, the United States and Russia can become allies. In my opinion, there is a good question why we feel the Chinese are better friends than the Americans. The answer for me is absolutely not clear. Unlike the first, the last, we still have at least some mental intersection.
A similar idea recently formulated by Kyron Skinner, Director of the Department of planning of the US state Department, which recently stated that “when we were in confrontation with the Soviet Union, ultimately it was a fight inside the West family. With China it is not so, we are dealing with is really another civilization and ideology.”
If you remember history, we suddenly find that we have already been with US allies. Moreover, Russia was the first to recognize the independence of the United States, and in that moment, when the us fought with the rest of the “Western world”. Allies of the Chinese, we will not ever — they lack the “gene of friendship.” Then why do we believe that we have foreign friends who will supply us the equipment without bookmarks? In today’s world, you need to double-check.
What the consequences might be for Russia as a whole
A country the size of Russia and its ambitions, without microelectronics will not survive. Now begins the era of IoT, which promises us a lot of threats. Until Russia manages to maintain a balance of forces on the principle of nuclear deterrence. Starting from tomorrow, the IoT can have a direct impact on our defense.
A small army of microscopic drones may be able to disable all of the Russian means of delivery, and then with our opinion, no one considered will not be exact. It is a war on another front, we are losing now. I sincerely believe that we Americans just walk away from each other, due to the fact that the existing antagonism largely stranded and is not natural but ideological. And go our ways, but it is possible that in this confrontation, as it is now, we never will be.
But the prospect of confrontation with China is quite serious and real. The confrontation is softer, primarily economic. China if we do get captured, then do it very gently. Just assimilate and make part of their territories. It is their way, and they have repeatedly followed.
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