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Is there any winner in the 'Technologic Cold War'?

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Big Chinese and North American companies have suffered the effects of the commercial war, causing losses to both countries, especially by the Huawei-Google rupture.

Is there any winner in the 'Technologic Cold War'?

The trade war between the United States and China, which began last year, has been escalating steadily. Companies from both countries, as well as other economies outside the border of these two giants, and the consumers themselves of these two have been affected by the conflict. Now, the new step that has taken has been towards the 'technological Cold War'.

Leer en español: ¿Hay algún ganador en la 'Guerra fría tecnológica'?

One of the most intense events of this commercial war has been the breakdown of relations between Google and the second largest smartphone producer in the world, Huawei. This is due to President Donald Trump's decision to include the Chinese company's 'blacklist'.

Technology is a fundamental axis of confrontation. During the first quarter of 2019, Huawei sold 59.1 million smartphones, 19% of the market and more than Apple, said Perfil.

This cut in the relations between both companies means that Huawei is not able to use the Android operating system developed by Google and that, in addition, will have restricted access to the Google Play application store, and even YouTube, Gmail, Google Maps, among others.

However, following this decision, the US government announced that it would delay the imposition of these sanctions on Huawei for three months so it will not affect current clients so abruptly. In addition, within this period, the governments of both countries could reach an agreement and not carry out this sanction.

Double loss situation?

According to the BBC, this could affect the rapid growth that Huawei was having internationally, which also recently surpassed Apple in number of phones sold in the world.

It may seem that China suffers most from this decision, but the truth is that several North American technology companies would be affected. This is due to the dependence between companies that exists in the technological development sector. In other words, electronic devices get their electronic components from companies around the world.

Read also: This has been the impact of trade war on USA's economy  

According to the BBC, between 10% and 13% of the sales of some of these North American companies depend on China's telecommunications companies. In fact, Apple itself gets chips from one of its main competitions, Samsung.

In addition, companies such as Xilinx, Qualcomm, Broadcom, and Intel are technology providers for Huawei and other Chinese brands, and according to the BBC, announced that they should stop selling their technology to comply with the ban. This would generate a loss of income to them.

Retaliation?

Huawei president Ren Zhengfei said that despite Google's measures, the company will continue to develop its own supplies to reduce dependence on foreign suppliers.

El Pais said that Huawei's responses to the United States regarding this cannot yet be projected, but say that there will be some from Beijing and that it could be applied to iPhone. According to El Tiempo, Apple gets a fifth of its profits from the Chinese market.

The iPhone was already losing momentum within China due to its economic slowdown and because other brands were winning in the competition of smartphones. According to Xataka, the last quarter of 2018, Apple's share in the Chinese market was 11.5% and had a decrease of 19.9% in sales.

However, Fortune said in April of this year that there may have been a hope for Apple to be more competitive within China with the reduction in the costs of its products, increasing sales by 6%.

An aggressive response from China could threaten Apple, one of the world's largest technology competitions. Goldman Sachs said that retaliation by the Asian giant, as it could well be the ban on the sale of products from this US company within the Chinese market, could cause Apple's profits to be reduced by 29%.

In fact, the firm Lynx Equity Strategy ensures that even if China does not take direct reprisals against the US, the nationalist sentiment could eventually affect Apple's sales in the country.

 

LatinAmerican Post | Valentina Moya

Translated from "¿Hay algún ganador en la 'guerra fría tecnológica'?

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