Tesla Universe on how U.S. sanctions on Huawei unleashed a wave of innovation

The resilience of companies previously seen as vulnerable to sanctions has surprised many.  Huawei, once thought to be in decline after restrictions cut off its access to key technology made a dramatic comeback in 2023 by unveiling the Mate 60 Pro.  This smartphone, powered by an advanced, domestically produced 7 nanometer processor, caught industry experts off guard.  Many believe that China's ability to innovate had been stifled by sanctions, yet Huawei's success told a different story.  The company has also built next-generation networking equipment using entirely local components, reinforcing its ability to navigate external pressures.  Rather than acting as barriers, trade restrictions have fueled advancements by forcing Chinese firms to develop alternative technologies.

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Texas Instruments, a major supplier of analog semiconductors reported a revenue shortfall of $2.3 billion due to reduced demand from Chinese buyers.

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For years, these [U.S. semiconductor] firms generated up to 30% of their revenue from China.  With demand shrinking, new concerns have emerged over whether these policies [tariffs and sanctions] are backfiring.  China's share of global semiconductor production has surged.  In 2020, it accounted for around 15% of the world's total output.  By 2023, that figure climbed to nearly 30%.

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China's influence extends beyond chip manufacturing.  Domestically-produced processors are now powering critical infrastructure, including data centers, telecommunications networks and artificial intelligence platforms.  Major companies are replacing imported components with locally-developed alternatives, reshaping the supply chain.  By 2023, over 60% of China's cloud computing industry was running on homegrown technology, demonstrating the shift away from foreign providers.

~ "China SHOCKING Tech Breakthrough: Did U.S. Sanctions Backfire?," Tesla Universe, March 17, 2025

Huawei Mate 60 Pro

Shaun Rein on how America's containment policies of China are backfiring

Containment policies don't work.  Now one of your previous guests, John Mearsheimer, has said he's 100% all-in on trying to contain China.  I think this is one of the most foolish, stupid policies that America could do.  One, as I've shown, Chinese companies have invested so much on innovation themselves, that they're now as good, if not better than the United States.  If America can build it, you can be sure that China eventually can, too.  It's either bigoted or stupid to say that Chinese can't catch up to Americans because China has the money, it has the government support and it has the STEM intellectual brains to try to catch up.  

Two, it hurts American companies like Intel, like Nvidia.  Nvidia has said that now their former client, Huawei, is now one of their biggest competitors.  So this was another mistake from the Mearsheimer school of thought of trying to contain China.  

And then third, more importantly, when you look at the bigger picture, I think a lot of countries in the Global South - I like to call them the Global Majority - they feel that the United States is bullying China and they're worried that they, too, could be bullied.  The United States went from being the liberators in the world, the good guys - they liberated the world from the Nazis, they liberated the world from a form of communism during the Soviet era that was not very productive economically - now they're really almost like triads or mafia, forcing other countries to follow whatever the United States wants.  And I think the Global Majority is angry at what the United States is doing.  I'll give an example: Malaysia has invested billions and billions of dollars because they want to be a base or locus for data centers.  But in his last week as president, Biden slapped export bans on high-end semiconductor chips to Malaysia.  And so Malaysia's plans over the last five years are gone...

So I think you're starting to see a deterioration of America's prestige, power and dominance in the world because people view them as bullying China and bullying other countries like Malaysia.  And that's why I start to see countries starting to move closer to China's orbit.

~ Shaun Rein, "Why China Brushes Off Trump's Tariffs," Thinkers Forum, March 1, 2025

Deirdre Bosa on how Trump's previous tariffs supercharged China's AI efforts

Not only have those previous tariffs not worked, but they actually supercharged China's AI efforts in some very unexpected ways...  Necessity is the mother of invention...  The previous tariffs, they laid the groundwork for DeepSeek's breakthrough.  Additional restrictions could supercharge at another much larger, definitely state-backed, Chinese company, Huawei.  And it could supercharge them in chips, the very foundation of the race.  Now without access to Nvidia's highest GPUs, DeepSeek built a model on less performance chips, H20s, which according to Reuters has led other Chinese companies to ramp up their own orders for those cheaper chips.  Now, as additional tariffs threaten to cut off access to them, Chinese AI companies may be forced to turn to Huawei's alternative.  Now again, they're not the best and they're not the preferred hardware, but they may be good enough and getting better.  This morning, the FT [Financial Times] reports that the company has significantly improved the yield, or amount of advanced AI chips that it can produce, a near doubling from about a year ago.

~ Deirdre Bosa, "How stricter chip restrictions could backfire to benefit Huawei," CNBC, 0:25 mark, February 25, 2025

Kevin Duffy on Trump's targeting of Huawei in the trade war with China

It's interesting how the Law of Unintended Consequences plays out. Firms like Huawei will probably never allow themselves to be as dependent on U.S. semiconductor suppliers as they have in the past. Trump's trade war is also driving Chinese consumers away from iPhones... benefiting Huawei. The damage Trump has done will never be undone, even if a "deal" is signed.

~ Kevin Duffy