It’s no secret the China-U.S. tensions have been rising steadily over the past few years. The bubbling faceoff in the Taiwan Strait is a primary reason, however. diverging economic interests are driving the wedge forward. Now, Palantir Senior Policy Advisor to the CEO, Jacob Helberg, believes the chill is extending towards Big Tech.
In examining the mounting tensions spurred by the CCP’s rollback of government employee usage of Apple products, CNBC invited Mr. Helberg, who is also to the Commissioner of the U.S. and China Economic Review Committee, to popular opinion segment, Squawk Box. The first question by hostess, Becky Quick, was straight and to the point: It sounds like things are definitely heating up. What do you think the implications are?
In response, Mr. Helberg opined that, “It is indeed a pleasure to be here with you, Becky. What is unfolding before us in real-time can be characterized as nothing short of a technological conflict between the United States and China.” Further, Mr. Helberg explained that the Biden administration awaits further elucidation concerning the recently introduced nanometer chip, while lawmakers on Capitol Hill raise valid queries regarding potential infringements of U.S. sanctions by the Huawei chip. Simultaneously, the Biden administration has initiated the imposition of export controls, designed to curtail China’s access to specific high-end semiconductor technologies.
Overall, Mr. Helberg contends that while these export controls may hinder the rapid progress of Huawei’s chip technology, they are unlikely to impose a permanent halt on China’s technological advancements. He underscores the concept that this slowing of progress aligns with the broader context, as artificial intelligence (AI) emerges as the focal point of a competitive race between the United States and China.
In the wake of this technological conflict, questions naturally arise regarding the implications for market access. “Does this ongoing tech war signify the closure of the U.S. market to Chinese enterprises, reciprocally leading to the Chinese market shutting its doors to U.S. companies?” queried Becky Quick.
Mr. Helberg then contended that, specifically in areas of advanced computing with substantial ripple effects on AI and related technologies, a division into two distinct technological domains is foreseeable. One sphere would be led by China, and the other by the United States.
Tensions Rise After China Throttles Apple iPhone Use
If tensions weren’t already on the rise, the temperature increased this week following recent widening of existing curbs on the use of iPhones by state employees, with some central government agencies to stop using their Apple mobiles at work. Apple, an American company headquartered in Cupertino, California, is a significant indirect employer in China, and has an extensive relationship with the highest branches of government. Its close business relationship with Foxconn, a major Taiwanese multinational electronics contract manufacturer, employs about 200,000 people on the mainland.
Regarding this newest tension, both Washington and Beijing, Mr. Helberg asserts, comprehend the monumental significance of AI in the context of military affairs. However, this competition extends beyond their domestic borders, having particular relevance within the Indo-Pacific region.
When contemplating the impact on Apple, the Palantir advisor posits that it becomes apparent that the ramifications extend to consumer-level technology. Restrictions, such as those imposed on iPhones within Chinese government establishments, have begun to reverberate. The ensuing market response–which witnessed a $200 billion reduction in Apple’s market value and a 6% decline in its stock price within the week–prompts the question of whether this reaction is an overzealous one.
Mr. Helberg points out that this situation reflects a growing undercurrent of mistrust surrounding the dual-use nature of various civilian technologies. In the U.S., this mistrust has manifested in the form of bans and limitations targeting entities like Huawei and CTU. These actions stem from legitimate concerns that the Chinese government could exploit its influence to collect extensive data on U.S. citizens and corporations.
Furthermore, the Palantir advisor provided a nuanced perspective on the riff, acknowledging the complexities of the situation from both sides. While American concerns are seen as justified, there exists a counterpoint from Beijing policymakers, who perceive a lack of clear separation between the private and public sectors in the United States.
In conclusion, the ongoing tensions between the U.S. and China, particularly in the realm of technology, present multifaceted challenges with far-reaching implications for businesses and markets, exemplified by the evolving dynamics in the tech sector and their impact on companies like Apple.
Palantir investors can only hope they’re not in the crosshairs next.
