The Tech Trap
Innovation Should Not Become A Zero-Sum Game
Cutthroat rivalry for a flawed empire.
Taiwan, Trade, and TikTok. When it seems like relations between the United States and China can not stoop any lower, they somehow do. It points to a looming power struggle at a time when the stale tale of the Cold War only adds fuel to the fire.
The entire relationship is defined by national security and the fear of irrelevance; both countries have a stance that favours their interests above everything else. It then becomes a matter of survival, where concessions are a result of sporadic mishaps rather than choice.
As they retreat into the cocoons of isolation, a new branch of discord emerges.
It’s called the tech race. A fresh sketch of a politically fractured, protectionist approach to globalisation. It paints a grim picture of a polarised future of technology driven by the economic race to the bottom. One that is hostile towards each other in every sense of the word but ultimately lacks the ideological cause.
One industry, in particular, semiconductors, is the key to the 21st-century tech reign. The winner vies an unprecedented edge in renewable energy, telecom, and quantum computing. Right now, it’s unclear who’s ahead and maybe – for us as end consumers – that is for the better.
But what exactly spurred this fierce competition, and how – if it’s worth enough – to get out of it? Tech manufacturing was not a point of fierce rivalry between the US and China until 2020. It was mainly a point of free market competition between public/private corporations to gain a competitive advantage.
When COVID hit, it disrupted every possible manufacturing supply chain. Whilst some industries sailed through the storm relatively unscathed, others have been dealt a heavy blow. Advanced tech manufacturing belongs to the latter group; the unfortunate victim of circumstance. In its case, the circumstance was not only a supply chain breakdown and a demand surge; it was also propped up by the geopolitically imposed trade war between the US and China.
It was a perfect storm for the industry. Tech could not just escape from the tight grip of the trade war. The entire industry was at a standstill until recently, patiently waiting for a change in fortunes. This “change” came to be an approval of new industrial policies set by the US and China – both pivot away from imports towards producing their own. They are also one of the very few countries that have the means to undertake such a massive pivot.
At the core of this tech rivalry is the fight for emerging technologies. They are a wild west; hundreds of companies can go through busts and bursts before their products are offered to consumers. Maybe, that is the reason why this carries such significance to the government. They just want to get a tighter grip before such tech becomes public. To break it down, Goldman Sachs’ newly created Office of Applied Innovation separates it into four categories, which:
Have national security implications
Represent chokepoints in the economy
Are “accelerant technologies”
Grant a competitive advantage
The reason both China and the US are investing heavily in semiconductor fabrication is that this piece of technology ticks all boxes. This spiralled a competition for reshoring the industry. A competition where the reaggregation of supply chains comes at the expense of increased prices for inputs. Either become dependent or develop it on your own.
And let me tell you, the technologies affected by the semiconductor industry is vast. Imagine a world where tiny crystals of silicon and other elements can shape the future of our planet. Where they can capture the sun’s rays and turn them into clean electricity that flows through our homes and cities. Where they can enable lightning-fast communication across vast distances and unleash the power of artificial intelligence. Where they can unlock the secrets of quantum physics and create new possibilities for computation. This is not a fantasy, but a reality that is being forged by the semiconductor industry. They are the unsung heroes of innovation, the architects of tomorrow’s technologies. They are transforming our lives and our world with their ingenuity and vision.
But what does it mean for us? Where does this leave us as third-party actors in the form of governments, businesses, and simple customers as end consumers?
Governments just don’t like the idea of choosing sides, they want to mix and match the best technologies from both. They want a smooth blend of innovation and cooperation, not a bitter brew of competition and conflict. They want tech that works together, not tech that tears apart. And so do we, the businesses and consumers who depend on tech for our daily lives. Do you really care what kind of chips are inside your iPhone? Or do you care more about what it can do for you?
Emerging tech should not be a pawn on the geopolitical chessboard. It should be a common good that benefits everyone, guided by a balance of market forces and regulations. Otherwise, it will lead to a zero-sum game where only one side can win and the other must lose. A game that has been played too often in our history.
Cutthroat rivalry for a flawed empire.