Show an ad over header. AMP

The great tech decoupling is here

Longstanding threats from both the U.S. and China to claw apart the two countries' interdependent tech economies are finally giving way to reality.

Why it matters: A divorce is going to be messy, with lots of near-term pain on both sides. And the end result may be a diminished, more fractured world compared to the one that existed just a couple of years ago.


Where it stands:

  • China has long manufactured a great deal of the parts and hardware used in U.S. tech products. It has also become a major consumer market for certain American tech giants, including Apple.
  • The U.S. provides the software and semiconductors that much Chinese tech runs on. Chinese firms benefiting from this arrangement include conglomerates like Tencent and Baidu as well as device makers like Xiaomi, Lenovo and Oppo.

Now, through action from both countries, the arrangement is breaking down.

  • A sometimes muddled push to attack Chinese telecom giant Huawei is starting to have global impact. Several U.S. allies have set limits on Huawei's role in supplying 5G networking gear and Huawei now says it's running out of the chips it needs to make phones because it's cut off from doing business with U.S. suppliers.
  • U.S. companies including Apple, Disney and Walmart are warning the White House that its planned ban on Tencent-owned WeChat could hobble their entire Chinese businesses. WeChat is a multi-purpose platform with total ubiquity in China, used not just for messaging, but also payments, social media and a raft of other functions.
  • The Trump Administration's Clean Network proposal seeks to sever the reach of Chinese technology so it ends at China's borders, calling for a range of initiatives including blocking Chinese devices from running American apps and pressuring other countries against using China's undersea internet cables.

What's next: Both countries are already looking inward to make plans for greater tech independence. Much of that has centered around the semiconductors that power high technology, with each country trying to onshore the entire chipmaking process, from research to manufacture.

  • China has long been working to develop its own chips, pouring money into the sector, including with fresh tax breaks earlier this year.
  • U.S. lawmakers put provisions to unleash some $23 billion in funding and tax incentives to support R&D and build domestic chip factories into must-pass defense legislation that cleared both the House and Senate last month.

Flashback: It's not the first time barriers have gone up between the two countries' tech economies.

The big picture: Even if the U.S. and China both ease off the decoupling push, the split may already be a fait accompli.

  • Companies that chiefly do business in one of the two countries may become unwilling to be strategically dependent on technology from the other country after seeing that dependence imperiled.
  • Already, companies like Foxconn that manufacture for Apple and other U.S. firms are aggressively trying to diversify their manufacturing operations beyond China.

Yes, but: A split could create opportunities — on either side.

  • There is a school of thought that companies like Huawei will emerge stronger from the U.S. bans, expanding their global presence without the encumbrance of fending off American threats.
  • Don't expect to see iPhones being made in the U.S. (If anything, production will shift to another low-cost, labor-rich market like Vietnam or India.) But decoupling might mean more U.S. manufacturing, especially of semiconductors.

The other side: Not everyone is betting on a total decoupling. Consider, for example, the continued trend of Chinese companies going public on U.S. exchanges.

Biden: The next president should decide on Ginsburg’s replacement

Joe Biden is calling for the winner of November's presidential election to select Ruth Bader Ginsburg's replacement on the Supreme Court.

What he's saying: "[L]et me be clear: The voters should pick the president and the president should pick the justice for the Senate to consider," Biden said. "This was the position the Republican Senate took in 2016 when there were almost 10 months to go before the election. That's the position the United States Senate must take today, and the election's only 46 days off.

Keep reading... Show less

Biden: "Ruth Bader Ginsburg stood for the law"

Joe Biden said Supreme Court Justice Ruth Bader Ginsburg "never failed, she was fierce and unflinching in her pursuit of civil and legal right and civil rights of everyone," after learning of her death Friday night.

What he's saying: Biden gave a statement after traveling to Delaware from Minnesota, where, earlier Friday, he gave a campaign speech at a carpenters’ training center in Hermantown, a suburb of Duluth. She was "not only a giant in the legal profession, but a beloved figure, and my heart goes out to all those who cared for her and cared about her."

Keep reading... Show less

Trump: Ruth Bader Ginsburg "led an amazing life"

President Trump said Supreme Court Justice Ruth Bader Ginsburg "led an amazing life," after he finished a campaign rally in Bemidji, Minnesota, and learned of her death.

What he's saying: "I’m sad to hear,” Trump told the press pool before boarding Air Force One. "She was an amazing woman, whether you agree or not, she was an amazing woman who led an amazing life."

Keep reading... Show less

Trump to move fast to replace Supreme Court Justice Ruth Bader Ginsburg

President Trump will move within days to nominate his third Supreme Court justice in just three-plus short years — and shape the court for literally decades to come, top Republican sources tell Axios.

Driving the news: Senate Majority Leader Mitch McConnell and Senate Republicans are ready to move to confirm Trump's nominee before Election Day, just 46 days away, setting up one of the most consequential periods of our lifetimes, the sources say.

Keep reading... Show less

What they're saying: Ruth Bader Ginsburg was a "tireless and resolute champion of justice"

Democratic and Republican lawmakers along with other leading figures paid tribute to Supreme Court Justice Ruth Bader Ginsburg, who died on Friday night at age 87.

What they're saying: “Our Nation has lost a jurist of historic stature," Chief Justice John Roberts said. "We at the Supreme Court have lost a cherished colleague. Today we mourn, but with confidence that future generations will remember Ruth Bader Ginsburg as we knew her — a tireless and resolute champion of justice.”

Keep reading... Show less

Supreme Court Justice Ruth Bader Ginsburg dies at 87

Supreme Court Justice Ruth Bader Ginsburg has died at 87.

Why it matters: Ginsburg had suffered from serious health issues over the past few years, including cancer. Her death sets up a fight over filling a Supreme Court seat with less than 50 days until the election.

Keep reading... Show less

NYT: White House drug price negotiations between broke down over $100 "Trump Cards"

Negotiations on a deal between the White House and pharmaceutical industry to lower drug prices broke down last month after Mark Meadows, the president's chief of staff, insisted that drugmakers pay for $100 cash cards to be mailed to seniors before the election, according to the New York Times.

Why it matters: Some of the drug companies feared that in agreeing to the prescription cards — reportedly dubbed "Trump Cards" by some in the pharmaceutical industry — they would boost Trump's political standing weeks ahead of Election Day with voters over 65, a group that is crucial to the president's reelection bid, per the Times.

Keep reading... Show less

In photos: Virginians line up for hours on first day of early voting

In some parts of Virginia, people waited in line up to four hours to cast their ballots on the first day of early voting, according to the Washington Post.

The big picture: The COVID-19 pandemic seems to already have an impact on how people cast their votes this election season. As many as 80 million Americans are expected to vote early, by mail or in person, Tom Bonier, CEO of TargetSmart, a Democratic political data firm, told Axios in August.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories