https://www.bloomberg.com/graphics/2019-trade-war-us-china-technology/?
A trade war between the world's two largest economies erupted this year, and technology is at the center of the skirmish. President Donald Trump blocked networking giant Huawei Technologies Co. from buying U.S. components, and put tariffs on many Chinese products. China responded by threatening to blacklist U.S. companies. The rising tension is testing a complex relationship, especially in tech where the U.S. and China are tightly intertwined through global supply chains and software that can zip across borders with the tap of a computer key. So which country has the most to lose? Who needs the other nation more?
Computer Chips
China's greatest reliance on the U.S. is arguably in semiconductors.
China's semiconductor imports surge
$300B
200
100
0
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
U.S. companies Intel Corp. and Nvidia Corp. dominate the market for processors, the key component of all laptops, desktop and server computers. The only viable alternative is another American firm: Advanced Micro Devices Inc.
Global computer chips market share, 2017
Samsung
SK Hynix
NVIDIA
Micron
Other
AMD
Intel
36%
18%
9%
12%
The three companies are based a short walk from each other in Silicon Valley, where they design their products.
Huawei Technologies
Intel Corporation
AMD Inc.
A few Huawei U.S. locations situated near other chip-making companies
NVIDIA Corporation
1 mi
1 km
The processors are manufactured mostly in Taiwan. Intel has one plant in China, but it makes memory chips—a commodity component. Huawei unveiled its first home-grown server chip this year, based on designs from ARM Holdings Inc., which is headquartered in the U.K. ARM has operations in the U.S., too, and the company recently said its products fall under the U.S. export controls. Without the latest ARM designs, Huawei may struggle to make its own chips.
Mobile Chips
In smartphones, Huawei is more independent, supplying at least two-thirds of its own processors and modems, according to analysts' estimates.
Percentage of Huawei's phones
using its own chips, 2018
68%
But other Chinese smartphone makers, such as Xiaomi, Vivo, Oppo and Lenovo, rely much more on San Diego, California-based Qualcomm Inc., the world's largest mobile chip maker.
Dependency on Qualcomm
Xiaomi
14.3%
Samsung
3.0
China Unicom
2.8
Quanta
2.3
Inventec
2.2
Asustek
2.0
WPG
1.5
Chinese
companies
Huawei
1.1
Avnet
1.1
Arrow Electronics
1.0
Midea
1.0
Switch Chips
Switch chips run machines that direct the flow of information across computer networks including the internet. This is another area of technology where China relies on the U.S. Broadcom Inc., headquartered in San Jose, California, is the largest maker of switch chips.
Ethernet switch chips market share, 2018
Broadcom
Others
80%
20%
Huawei, a top networking gear provider, has been a huge buyer of these components. If the Chinese company wanted to develop its own switch chips, it would still need other U.S. technology. Synopsys Inc. and Cadence Design Systems Inc. are the main suppliers of software that's used to design chips—and they both cut Huawei off recently.
Internet Switches Market share
by shipments, 2018 Q4
Juniper
Huawei
Others
Cisco
H3C
HP
26%
13%
12%
38%
Microsoft
Microsoft's Windows operating system still runs most personal computers, including almost all the PCs China buys. Windows is still used by the Chinese government and government-owned entities. Microsoft's Office productivity software is also popular in the country.
Desktop operating system market share, May 2019
Windows
Mac OS
88%
9%
Microsoft hasn't said whether it can keep supplying Windows and Office to Huawei and other Chinese technology companies.
Worldwide PC shipments market share, Q1 2019
Lenovo
Other
Apple
Acer
Dell
HP
23%
23%
18%
23%
A prolonged ban on the supply of Windows and Office to Chinese computer makers would force them to build alternatives that don't exist yet. Lenovo, the world's biggest PC manufacturer, is Microsoft's biggest customer, according to Bloomberg supply-chain analysis.
Apple
Chinese consumers are increasingly embracing alternatives to the iPhone as Apple's devices have become more expensive and local smartphones have improved.
Handset shipments by phone type
Samsung
300M
Apple
200
Huawei
100
0
2013
2018
Huawei has gone from a small smartphone player to overtaking Apple, mainly on the strength of demand in China—a surge also felt by other local phone makers Xiaomi, Oppo and Vivo.
China smartphone market share by shipments
Q4 2017
Q4 2018
21.3%
Huawei
29%
17.5
Oppo
19.6
16.5
Vivo
18.8
12.9
Apple
11.5
13.9
Xiaomi
10
In China, Apple offers some services like Apple Music, but newer products—the forthcoming Apple credit card, Apple News+, and Apple TV+—either won't launch in China or won't be immediately available there. Chinese consumers have already embraced local alternatives. Tencent Music's monthly user count easily exceeds the total population of the U.S.
Mobile active users for Tencent Music
654 million
The main reason China needs Apple is jobs. The U.S. tech giant has most of its devices made in China, supporting about 3 million workers there.
Apple supplier facilities by country, 2019
China
380
Japan
127
United States
58
Taiwan
55
Korea
40
Philippines
19
Vietnam
18
Malaysia
17
Thailand
16
Singapore
12
Mobile Software
Google's Android smartphone operating system is ubiquitous in the country, running on phones from Huawei, Oppo, Vivo and Lenovo. But for Chinese consumers, these manufacturers use a skeletal version of the software that has no Google services.
Global smartphone shipments using
Android operating system, by company
1.2
B
Samsung
0.9
Huawei
0.6
Other Chinese
companies
0.3
Other
0
'12
'13
'14
'15
'16
'17
'18
Outside China, they still need Google's support, though. When the U.S. internet giant recently said it would cut off Huawei's access to the full Android software, that was a major setback.
Smartphone shipments by OS, 2018
Android
Other
iOS
1.2B
0.2B
Artificial Intelligence
China is betting heavily on AI. Money is pouring in from China's investors, big internet companies and its government, driven by a belief that the technology can remake entire sectors of the economy, as well as national security. A similar effort is underway in the U.S., but in this new global arms race, China has three advantages: A vast pool of engineers to write the software, a massive base of 751 million internet users to test it on, and most importantly staunch government support that includes handing over gobs of citizens' data—something that makes Western officials squirm.
AI startups by most equity funding raised,
as of June 21, 2019
Bytedance
$3.11B
SenseTime
1.63
Face++
1.36
Nuro
1.03
UiPath
1.02
Zoox
0.79
Chinese
companies
Tanium
0.77
Horizon Robotics
0.70
Aurora
0.69
Avant
0.66
Cloud Services
Amazon.com Inc., Microsoft Corp. and Google are the biggest U.S. providers of computing power and services over the internet.
Amazon cloud revenue projection
$120B
80
40
0
'18
'19
'20
'21
'22
'23
'24
'25
But in China, the companies don't even make the top six. Alibaba Group Holding Ltd., Tencent Holdings Ltd. and their compatriots dominate the domestic market, and they're on the rise in other parts of the Asia Pacific region, according to Synergy Research Group.
Chinese companies' share of
cloud market in APAC, Q1 2019
40%
Online Search
Baidu runs the largest search engine in China. Google pulled out of the country in 2010 and recent efforts to return have failed so far.
Top search engines, unique visitors
Baidu
464.7M
Qihoo 360
328.5
Sogou
249.4
Etao
33.9
YouDao
31.8
Bing
28.6
Soku
5.3
Online Shopping
Chinese consumers don't need U.S. companies for their online shopping needs. Amazon plans to shut down its Chinese marketplace business in July, and will only sell goods to mainland customers seeking products from other countries.
Amazon revenue breakdown, by geography
Germany
Japan
Other
U.K.
U.S.
69%
9%
6%
6%
11%
Alibaba and JD.com dominate the market, and Amazon never reached more than 1% market share, according to iResearch.
Top 10 e-commerce retailers in China by sales share,
June 2018
Alibaba
58.2%
JD.com
16.3
Pinduoduo
5.2
Suning
1.9
Vip.com
1.8
Gome
0.7
Amazon China
0.7
Yihaodian
0.7
Dangdang
0.2
Jumei
0.1
Social Networks
American social networks also aren't a part of daily life in China. Facebook Inc. and Twitter Inc. don't operate there—and that's not likely to change any time soon.
WeChat, the messaging service owned by Tencent, is China's leading hub for communication and other everyday tasks, like making mobile payments.
WeChat users, 2019
That's about 673M
more than the 2018
U.S. population
1 billion
QQ, another messaging service also owned by Tencent and popular with younger internet users, has 823 million monthly users.
QQ monthly active users, March 2019
That's about
1/10th of the
global population
823 million
Weibo, a Chinese social network similar to Twitter, has more than 203 million daily active users—almost 70 million more than Twitter has.
Weibo and Twitter monthly active users
500M
400
300
200
Q1
2016
Q1
2019
Sources:
- Computer chips: General Administration of Customs, PRC, IDC, Google Earth, Huawei Technologies Co.
- Mobile chips: Stifel Nicolaus, Bloomberg
- Switch chips: The Linley Group, IDC
- Microsoft: NetApplications.com, IDC, Imaginechina via AP Images
- Apple: IDC, Tencent Music Entertainment Group, Apple Company Filings
- Online search: iResearch, Bloomberg
- Mobile Software: IDC
- Artificial Intelligence: Pitchbook
- Cloud services: Bloomberg Intelligence, Synergy Research
- Online shopping: Amazon/company filings, eMarketer
- Social network: VCG/VCG via Getty Images, WeChat, U.S. Census Bureau, Tencent, Company Filings, Bloomberg
Additional work by: Lulu Chen, Edwin Chan and Matt Turner
Editor: Alistair BarrBy Ian King, Mira Rojanasakul and Adrian Leung
A trade war between the world's two largest economies erupted this year, and technology is at the center of the skirmish. President Donald Trump blocked networking giant Huawei Technologies Co. from buying U.S. components, and put tariffs on many Chinese products. China responded by threatening to blacklist U.S. companies. The rising tension is testing a complex relationship, especially in tech where the U.S. and China are tightly intertwined through global supply chains and software that can zip across borders with the tap of a computer key. So which country has the most to lose? Who needs the other nation more?
CLICK TO JUMP TO SECTION:
CRUCIAL NEEDS: COMPUTER CHIPS MOBILE CHIPS SWITCH CHIPS TAKE IT OR LEAVE IT: MICROSOFT APPLE MOBILE SOFTWAREARTIFICIAL INTELLIGENCE WHO NEEDS IT?: CLOUD SERVICES ONLINE SEARCH ONLINE SHOPPING SOCIAL NETWORKSComputer Chips
China's greatest reliance on the U.S. is arguably in semiconductors.
China's semiconductor imports surge
$300B
200
100
0
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
U.S. companies Intel Corp. and Nvidia Corp. dominate the market for processors, the key component of all laptops, desktop and server computers. The only viable alternative is another American firm: Advanced Micro Devices Inc.
Global computer chips market share, 2017
Samsung
SK Hynix
NVIDIA
Micron
Other
AMD
Intel
36%
18%
9%
12%
The three companies are based a short walk from each other in Silicon Valley, where they design their products.
Huawei Technologies
Intel Corporation
AMD Inc.
A few Huawei U.S. locations situated near other chip-making companies
NVIDIA Corporation
1 mi
1 km
The processors are manufactured mostly in Taiwan. Intel has one plant in China, but it makes memory chips—a commodity component. Huawei unveiled its first home-grown server chip this year, based on designs from ARM Holdings Inc., which is headquartered in the U.K. ARM has operations in the U.S., too, and the company recently said its products fall under the U.S. export controls. Without the latest ARM designs, Huawei may struggle to make its own chips.
Mobile Chips
In smartphones, Huawei is more independent, supplying at least two-thirds of its own processors and modems, according to analysts' estimates.
Percentage of Huawei's phones
using its own chips, 2018
68%
But other Chinese smartphone makers, such as Xiaomi, Vivo, Oppo and Lenovo, rely much more on San Diego, California-based Qualcomm Inc., the world's largest mobile chip maker.
Dependency on Qualcomm
Xiaomi
14.3%
Samsung
3.0
China Unicom
2.8
Quanta
2.3
Inventec
2.2
Asustek
2.0
WPG
1.5
Chinese
companies
Huawei
1.1
Avnet
1.1
Arrow Electronics
1.0
Midea
1.0
Switch Chips
Switch chips run machines that direct the flow of information across computer networks including the internet. This is another area of technology where China relies on the U.S. Broadcom Inc., headquartered in San Jose, California, is the largest maker of switch chips.
Ethernet switch chips market share, 2018
Broadcom
Others
80%
20%
Huawei, a top networking gear provider, has been a huge buyer of these components. If the Chinese company wanted to develop its own switch chips, it would still need other U.S. technology. Synopsys Inc. and Cadence Design Systems Inc. are the main suppliers of software that's used to design chips—and they both cut Huawei off recently.
Internet Switches Market share
by shipments, 2018 Q4
Juniper
Huawei
Others
Cisco
H3C
HP
26%
13%
12%
38%
Microsoft
Microsoft's Windows operating system still runs most personal computers, including almost all the PCs China buys. Windows is still used by the Chinese government and government-owned entities. Microsoft's Office productivity software is also popular in the country.
Desktop operating system market share, May 2019
Windows
Mac OS
88%
9%
Microsoft hasn't said whether it can keep supplying Windows and Office to Huawei and other Chinese technology companies.
Worldwide PC shipments market share, Q1 2019
Lenovo
Other
Apple
Acer
Dell
HP
23%
23%
18%
23%
A prolonged ban on the supply of Windows and Office to Chinese computer makers would force them to build alternatives that don't exist yet. Lenovo, the world's biggest PC manufacturer, is Microsoft's biggest customer, according to Bloomberg supply-chain analysis.
Apple
Chinese consumers are increasingly embracing alternatives to the iPhone as Apple's devices have become more expensive and local smartphones have improved.
Handset shipments by phone type
Samsung
300M
Apple
200
Huawei
100
0
2013
2018
Huawei has gone from a small smartphone player to overtaking Apple, mainly on the strength of demand in China—a surge also felt by other local phone makers Xiaomi, Oppo and Vivo.
China smartphone market share by shipments
Q4 2017
Q4 2018
21.3%
Huawei
29%
17.5
Oppo
19.6
16.5
Vivo
18.8
12.9
Apple
11.5
13.9
Xiaomi
10
In China, Apple offers some services like Apple Music, but newer products—the forthcoming Apple credit card, Apple News+, and Apple TV+—either won't launch in China or won't be immediately available there. Chinese consumers have already embraced local alternatives. Tencent Music's monthly user count easily exceeds the total population of the U.S.
Mobile active users for Tencent Music
654 million
The main reason China needs Apple is jobs. The U.S. tech giant has most of its devices made in China, supporting about 3 million workers there.
Apple supplier facilities by country, 2019
China
380
Japan
127
United States
58
Taiwan
55
Korea
40
Philippines
19
Vietnam
18
Malaysia
17
Thailand
16
Singapore
12
Mobile Software
Google's Android smartphone operating system is ubiquitous in the country, running on phones from Huawei, Oppo, Vivo and Lenovo. But for Chinese consumers, these manufacturers use a skeletal version of the software that has no Google services.
Global smartphone shipments using
Android operating system, by company
1.2
B
Samsung
0.9
Huawei
0.6
Other Chinese
companies
0.3
Other
0
'12
'13
'14
'15
'16
'17
'18
Outside China, they still need Google's support, though. When the U.S. internet giant recently said it would cut off Huawei's access to the full Android software, that was a major setback.
Smartphone shipments by OS, 2018
Android
Other
iOS
1.2B
0.2B
Artificial Intelligence
China is betting heavily on AI. Money is pouring in from China's investors, big internet companies and its government, driven by a belief that the technology can remake entire sectors of the economy, as well as national security. A similar effort is underway in the U.S., but in this new global arms race, China has three advantages: A vast pool of engineers to write the software, a massive base of 751 million internet users to test it on, and most importantly staunch government support that includes handing over gobs of citizens' data—something that makes Western officials squirm.
AI startups by most equity funding raised,
as of June 21, 2019
Bytedance
$3.11B
SenseTime
1.63
Face++
1.36
Nuro
1.03
UiPath
1.02
Zoox
0.79
Chinese
companies
Tanium
0.77
Horizon Robotics
0.70
Aurora
0.69
Avant
0.66
Cloud Services
Amazon.com Inc., Microsoft Corp. and Google are the biggest U.S. providers of computing power and services over the internet.
Amazon cloud revenue projection
$120B
80
40
0
'18
'19
'20
'21
'22
'23
'24
'25
But in China, the companies don't even make the top six. Alibaba Group Holding Ltd., Tencent Holdings Ltd. and their compatriots dominate the domestic market, and they're on the rise in other parts of the Asia Pacific region, according to Synergy Research Group.
Chinese companies' share of
cloud market in APAC, Q1 2019
40%
Online Search
Baidu runs the largest search engine in China. Google pulled out of the country in 2010 and recent efforts to return have failed so far.
Top search engines, unique visitors
Baidu
464.7M
Qihoo 360
328.5
Sogou
249.4
Etao
33.9
YouDao
31.8
Bing
28.6
Soku
5.3
Online Shopping
Chinese consumers don't need U.S. companies for their online shopping needs. Amazon plans to shut down its Chinese marketplace business in July, and will only sell goods to mainland customers seeking products from other countries.
Amazon revenue breakdown, by geography
Germany
Japan
Other
U.K.
U.S.
69%
9%
6%
6%
11%
Alibaba and JD.com dominate the market, and Amazon never reached more than 1% market share, according to iResearch.
Top 10 e-commerce retailers in China by sales share,
June 2018
Alibaba
58.2%
JD.com
16.3
Pinduoduo
5.2
Suning
1.9
Vip.com
1.8
Gome
0.7
Amazon China
0.7
Yihaodian
0.7
Dangdang
0.2
Jumei
0.1
Social Networks
American social networks also aren't a part of daily life in China. Facebook Inc. and Twitter Inc. don't operate there—and that's not likely to change any time soon.
WeChat, the messaging service owned by Tencent, is China's leading hub for communication and other everyday tasks, like making mobile payments.
WeChat users, 2019
That's about 673M
more than the 2018
U.S. population
1 billion
QQ, another messaging service also owned by Tencent and popular with younger internet users, has 823 million monthly users.
QQ monthly active users, March 2019
That's about
1/10th of the
global population
823 million
Weibo, a Chinese social network similar to Twitter, has more than 203 million daily active users—almost 70 million more than Twitter has.
Weibo and Twitter monthly active users
500M
400
300
200
Q1
2016
Q1
2019
Sources:
- Computer chips: General Administration of Customs, PRC, IDC, Google Earth, Huawei Technologies Co.
- Mobile chips: Stifel Nicolaus, Bloomberg
- Switch chips: The Linley Group, IDC
- Microsoft: NetApplications.com, IDC, Imaginechina via AP Images
- Apple: IDC, Tencent Music Entertainment Group, Apple Company Filings
- Online search: iResearch, Bloomberg
- Mobile Software: IDC
- Artificial Intelligence: Pitchbook
- Cloud services: Bloomberg Intelligence, Synergy Research
- Online shopping: Amazon/company filings, eMarketer
- Social network: VCG/VCG via Getty Images, WeChat, U.S. Census Bureau, Tencent, Company Filings, Bloomberg
Additional work by: Lulu Chen, Edwin Chan and Matt Turner
Editor: Alistair Barr
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