American chipmaker Qualcomm caught up in US-China trade disputes

World Today

QualcommPhoto courtesy of Kārlis Dambrāns/Flickr.

Telecom companies are finding themselves caught up in trade tensions between the U.S. and China. One of the biggest is American chipmaker Qualcomm.

CGTN’s Phil Lavelle reports.

Multiple industries could be hit hard by an U.S.-China trade conflict, and one Californian tech company, in particular, has reason to be concerned.

You may not have heard of Qualcomm, but you almost certainly use its products.

Qualcomm is a microchip maker and provides chips used in billions of devices the world over, including the majority of cellphones, where it either manufactures the chips or licences the tech used to make them.

It’s a Californian success story based in San Diego but with a global reach.

The problem it faces is its links with China. One of Qualcomm’s biggest customers is ZTE Corporation: a tech telecoms giant.

But ZTE is unpopular with the American government right now for allegedly lying over punishing employees who violated sanctions against Iran and the DPRK. So the U.S. has banned ZTE from buying components from American companies for seven years, effectively telling a homegrown company that it’s going to take a huge dent in its takings.

Qualcomm’s also facing headaches over its acquisition of a firm called NXP Semiconductors which needs approval from a number of countries.

It’s managed to get almost all the way there but has now found that deal – which it was really counting on – has stalled because of an anti-trust review being conducted in China which some claim is a retaliatory move by Beijing. This as the U.S. talks about new restrictions on Chinese investment in American companies and restrictions on partnerships between organizations from both sides.

William Yu, an economist at UCLA’s Anderson School of Management, says that “In the short term, it seems like a mess, but in the long run, I think the U.S. has some kind of reason to address this kind of issue which is a global imbalance in terms of trade.”

The battle here is not just for today but for the very future of the internet.

As a market leader, Qualcomm is desperate to be in the lead when it comes to the next stage of the internet: 5G. That’s still in the early stages, but whoever stakes their claim as the dominant chip maker could see their position cemented. It’s up against the likes of Ericsson and China’s own Huawei, which was also recently banned in the United States in part because of espionage fears from officials in Washington.

“Qualcomm wants to be one of the major equipment makers for the infrastructure as 5G gets built, and it’s important to them because they want to make sure that they continue to have the next thing to sell equipment to and not get left behind. This is a problem Intel has right now,” explains Tom Merritt, a tech journalist and podcaster based in Los Angeles.

CGTN reached out to Qualcomm for an interview. The company says it’s not commenting right now.