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The Impact of China-US Trade Fight and Huawei and ZTE Bans on the Global Communications Equipment Supply Chain

Published By :

Market Intelligence & Consulting Institute

Published Date : Aug 2019

Category :

Telecommunications

No. of Pages : 64 Pages

To keep his campaign promise, Trump signed an executive memorandum to impose higher tariffs on Chinese goods imported into the United States in March 2018, involving large amounts and plenty of goods. In the first two rounds of tariffs, the US has imposed duties on a total of US$50 billion worth of Chinese goods, including semiconductor ICs, car parts, machinery, and equipment, including servers. And smartphones are likely to be on the list. The U.S. Department of Commerce imposed a denial order against ZTE on April 16, 2018, banning American businesses or individuals from selling high-tech components and technologies to the Chinese telecom equipment maker.

Despite the ban has been expanded to Huawei, the G20 Summit seems to help ratchet down the trade fight between the US and China. This report provides a description of how this all began, a whole picture of these bans and tariffs, and how these have affected the global IT industry, especially in the communications sector; looks at some of the possible consequences if the fight continues. 

Table of Contents

1. Preface

1.1 Background 
1.2 Scope of Impact 
1.1.1 IT and Telecom Industries 
1.1.2 Brands and OEM/ODMs Export Goods from China to the United States 

2. Taiwanese Communications Products Manufacturered in China 
2.1 Smartphone Industry 
2.2.1 Production Value 
2.2.2 Major Clients 
2.3 Wireless Broadband Equipment Industry 
2.3.1 Production Value 
2.3.2 Major Clients 
2.4 Fixed Broadband Equipment Industry 
2.4.1 Production Value 
2.4.2 Major Clients 

3. The Possible Impact on the Industry 
3.1 Smartphone Industry 
3.1.1 Export Value 
3.1.2 Stakeholder Analysis 
3.2 Wireless Broadband Equipment Industry 
3.2.1 Export Value 
3.2.2 Stakeholder Analysis 
3.3 Fixed Broadband Equipment Industry 
3.3.1 Export Value 
3.3.2 Stakeholder Analysis 

4. MIC Perspective 

5.Preface 

6.Implications for the ZTE Supply Chain 

6.1 Application Processor and Wireless Communication Chip 
6.1.1 The Current Market 
6.1.2 Possible Places to Transfer the Orders 
6.2 Radio Frequency Component 
6.2.1 The Current Market
6.2.2 Possible Places to Transfer the Orders 
6.3 Operating System 
6.3.1 The Current Market 
6.3.2 Possible Places to Transfer the Orders 

7. Implications for ZTE's 5G Ambitions 
7.1 The Denial Order Seeks to Stifle ZTE's Development Momentum by Barring the Use of American Software and Hardware 
7.1.1 The Incapability to Conduct Independent R&D for Core Chips and Components Has Become a Major Issue 
7.1.2 The U.S. is Determined to Cripple China's 5G Development, and the Shots are Being Fired at ZTE 

8. MIC Perspective 

9.Preface 

9.1 iPhone Likely to Become a Bargaining Chip in US-China Trade War 

10.Impact Analysis 
10.1 iPhone Accounts for over 42% of the Smartphone Imports in the United States 
10.2 Impact on Supply Chain 

11.Countermeasures 
11.1Short-term Strategy: Adjust Existing Capacity to Increase Production in Taiwan 
11.2 Mid-to Long-Term Strategy: Increase Production Share in South/Southeast Asia 

12.MIC Perspective 

13. Preface 

13.1 Conflict Intensifies as Neither Side Willing to Make Concessions 

14. Development of US and Chinese Server Industries 
14.1 US Dominance Challenged by China 
14.2 China’s Spy Chip Incidents Ignites Network Security Concerns Worldwide 

15. Impact on Taiwan’s Server Industry 
15.1 Less Impact on Taiwanese Server Industry Chain 
15.2 Greater Impact on Server Industry from Network Security Concerns; Some Vendors Move Production Lines out of China 

16. MIC Perspective 
16.1 US-China Relations Remain Tense in Near Future 
16.2 Limited Impact on Server Industry 
16.3 Chinese Spy Chip Scandal Speeds up Moving Production Lines outside China 

17. Huawei Network Equipment Banned by Several Countries and Telecoms 

18.Main Reasons behind Lack of Trust in Chinese Enterprises 

18.1 Huawei’s Global Expansion Backed by Government 
18.2 Chinese Enterprises’ Difficulty in Maintaining Independence under China’s Legal System 
18.2.1 Chinese Government’s Increased Control over Chinese Enterprises
18.2.2 Chinese Government’s Legitimate Rights to Conduct Intelligence through Enterprises 

19. Huawei Defends Equipment Security 
19.1 Huawei Asserts Ability to Manage its Security and Keep Independence from the Government 
19.2 Huawei Proposes Security Improvement Measurements to Win Trust of Western Countries 

20. Most Enterprise Customers Still Hold on to Huawei Equipment 
20.1 Huawei's Biggest Loss in the Asia Pacific is the Loss of Market Share in Japan 
20.2 Huawei's Market Share in Europe Remains Unaffected Except BT 
20.2.1 Other European Operators Still Cooperate with Huawei 
20.2.2 Germany Government Has Security Concerns about Huawei's Technology but Not Telecom Operators 
20.2.3 Huawei's 5G Product Advantages Make it Difficult for Telecom Operators to Give Up Easily 

21. Political Risks That Huawei May Have to Encounter in the Future 
21.1 Huawei Continues to Face Political Risks in the Future 
21.2 Governments and Operators of All Countries Have High Possibility of Expanding the Blockade 
21.3 ZTE Should Be Worried About the US Government Bans on All China-made Products 

22. MIC Perspective 
22.1 The Impact on Huawei’s Brand Image is Greater than on Its Revenues 

23.G20 Summit
23.1 G2’s Announcements in G20 Summit 
23.2 US Tech Companies Sidestep Trump’s Huawei Ban 

24.Short-, Medium-, and Long-term Development Trends 
24.1 Short-term Development: Situation Seems to Get Better 
24.2 Medium-term Development: To Strengthen Ties with Non-US Suppliers 
24.3 Long-term Development: To Construct Homegrown Industry Chain 

25.Impact on the Industry 

26.MIC Perspective

26.1 Seek Opportunities Stemming from US Companies 
26.2 Help China Bridge the Gap in the Industry Supply Chain 
26.3 Diversify Supply Chain to Reduce Risks 

Appendix 
Glossary of Terms 
List of Companies  

List of Table

Table 1 Tariffs and Prices of iPhone X in Different Countries 
Table 2 Impact of US-China Trade War on Apple’s Taiwanese Partners 
Table 3 Analysis of EMS Providers’ Production Sites
Table 4 Major US Trading Partners in 2017 
Table 5 Bans on Huawei Equipment Worldwide 

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