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jim@tiriasresearch
Just a follow-up note. The US House intelligence subcommittee just declared war ...
EREBUS
As we have seen with Apple, most companies try to establish a virtual monopoly ...
Protectionism threatens the technology industry
Jim McGregor
10/3/2012 1:57 PM EDT
China to dominate the value chain?
Just examine it from each part of the value chain. In terms of semiconductors, China is expanding production both from domestic and international manufacturers, the number of engineers in the country is growing exponentially, and the number of Chinese semiconductor companies is also growing rapidly.
It is becoming difficult to keep track of all the semiconductor start-ups focused on processors in China because they seem to come out of nowhere quickly. The processors powering todays advanced electronics are really all system-on-chip (SoC) solutions. As a result, they just require the knowledge to piece together different intellectual property (IP) blocks into a single piece of silicon.
I have seen Chinese companies achieve working silicon processors in as little as six months and create products that will eventually compete with the mainstream products from industry powerhouses like Qualcomm.
In software, Chinese OEMs remain reliant upon foreign operating system in many areas, but there is nothing to stop them from adopting an alternative solution, especially of the powerful Chinese carriers support a competing standard to Android, iOS, and Windows. And, the rest of the value chain for retail, content, and services already has options unique to China. So, what if the industry litigation, tariff battles, or other global political issues pushed the Chinese government and industry to become closed off to foreign technology solutions? And the same could easily be said about any of the emerging markets, especially the BRIC (Brazil, Russia, India, and China) countries.
The moral of this article is that even in the age of the global economy, we need to not lose sight of the value and fragility of open borders and competition. The technology industry is a very high profile segment of the economy and one that is subject to great scrutiny by all. Although it is natural to focus on protecting a company’s technology and/or market position, competition ultimately benefits the entire industry. As a result, in may be better to compete, than to resort to measures that eliminate competitive threats.
Jim McGregor
TIRIAS Research
Founder/Principal Analyst
Just examine it from each part of the value chain. In terms of semiconductors, China is expanding production both from domestic and international manufacturers, the number of engineers in the country is growing exponentially, and the number of Chinese semiconductor companies is also growing rapidly.
It is becoming difficult to keep track of all the semiconductor start-ups focused on processors in China because they seem to come out of nowhere quickly. The processors powering todays advanced electronics are really all system-on-chip (SoC) solutions. As a result, they just require the knowledge to piece together different intellectual property (IP) blocks into a single piece of silicon.
I have seen Chinese companies achieve working silicon processors in as little as six months and create products that will eventually compete with the mainstream products from industry powerhouses like Qualcomm.
In software, Chinese OEMs remain reliant upon foreign operating system in many areas, but there is nothing to stop them from adopting an alternative solution, especially of the powerful Chinese carriers support a competing standard to Android, iOS, and Windows. And, the rest of the value chain for retail, content, and services already has options unique to China. So, what if the industry litigation, tariff battles, or other global political issues pushed the Chinese government and industry to become closed off to foreign technology solutions? And the same could easily be said about any of the emerging markets, especially the BRIC (Brazil, Russia, India, and China) countries.
The moral of this article is that even in the age of the global economy, we need to not lose sight of the value and fragility of open borders and competition. The technology industry is a very high profile segment of the economy and one that is subject to great scrutiny by all. Although it is natural to focus on protecting a company’s technology and/or market position, competition ultimately benefits the entire industry. As a result, in may be better to compete, than to resort to measures that eliminate competitive threats.
Jim McGregor
TIRIAS Research
Founder/Principal Analyst
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EREBUS
10/7/2012 4:46 PM EDT
As we have seen with Apple, most companies try to establish a virtual monopoly for their product lines. They hope that they can kill off or significantly delay the competition. It is natural for the original developers to want to keep their lead as long as possible.
However, they are only playing for time. Competitors will emerge if the product idea is lucritive enough and people do not mind buying copies.
Protectionism is an old game, been happening for millenia. I do not expect that to change. The best protectionism is to give the consumer a good product at a good price and back it up with excellent customer service. People will remain loyal and pay up for that option. Otherwise, its just a cost shoot out and you will eventually lose.
Just my opinion.
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jim@tiriasresearch
10/8/2012 11:29 AM EDT
Just a follow-up note. The US House intelligence subcommittee just declared war on Chinese companies Hauwei and ZTE. As if the threat of losing access to the Chinese market were not enough, the US government throws gas on the fire.
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