The U.S. Department of Commerce announced late Monday that because ZTE Corporation violated the settlement agreement reached with the U.S. government last year, it will implement a seven-year export ban on the company, which means that U.S. companies cannot provide products to ZTE within seven years.
On the morning of the 17th, the Chinese Ministry of Commerce responded that it will pay close attention to the progress of the situation and stand ready to take necessary measures to safeguard the legitimate rights and interests of Chinese companies.
In addition, U.S. media reported that the U.S. is considering launching a new 301 survey on China, Sword Index cloud computing and other high-tech service areas. If the U.S. officially takes action, this will be followed by steel and aluminum tariffs and intellectual property disputes. The third battlefield in the trade war.
01 Impact 5G advancement
In fact, ZTE's mobile phone service in the United States has been more successful than Huawei's frequent hits in the United States. ZTE's mobile phones have cooperated with major US telecommunication operators, including Verison and AT&T.
According to the analysis of CICC, the US Department of Commerce imposes a prohibition on the export of ZTE's communications. Failure to reach a settlement within 1-2 months will affect the normal production and sales of communications equipment and mobile phones. At the same time, it will affect the current global and Chinese The operator's network construction has a certain impact, and may affect the future 5G network promotion.
Generally speaking, this event is part of the trade friction between China and the United States. It may require the relevant government departments such as the Ministry of Commerce to come forward and solve it through diplomatic channels.
China Merchants Securities’s electronic research team expects that the follow-up between ZTE and the U.S. Department of Commerce will achieve a second settlement through mediation.
For U.S. companies, cutting off the 'linkage' with ZTE is not a good thing.
In the US time last night, the share price of ZTE’s major U.S. suppliers has fallen sharply. For example, 30% of revenues in 2017 were generated by ZTE’s Acacia Communications Corporation (NASDAQ: ACIA). The stock price closed down on Monday. 35.97%. The share price of another supplier Oclaro (NASDAQ: OCLR) also fell sharply by 15.18%. The company's revenue in 2017 was 18% from ZTE.
02 Chinese lack of core pain
China Merchants Securities’s electronic research team pointed out that ZTE's main businesses are base stations, optical communications and mobile phones. Among them, some RF components such as cavity filters, optical module manufacturers, and mobile phone modules in the base station can basically meet the requirements. Self-sufficient demand. Only chips, in some of the three major application areas, have a certain degree of self-sufficiency.
Among them, the RRU base station technology has changed rapidly, the threshold is high, and the self-sufficiency rate is the lowest. The self-sufficiency rate of the base station chip is almost 0, which has become the most thorny issue in ZTE's embargo.
In other words, in the three major application areas of ZTE, the block with the highest chip threshold is the RRU base station. It takes a long time to realize domestic substitution in this field.
The ZTE's embargo has a great impact on the communications industry. It also strikes the alarm bell of the semiconductor industry. Self-control is not just a slogan, but it is related to national security and national affairs and people's livelihood.
03 Cold War between China and the United States
With the escalation of the trade war, the relationship between Chinese and American technology companies has become extremely subtle.
Earlier, Wall Street heard that Martin Feldstein, a professor of economics at Harvard University, believes that the United States has only one target of imposing steel and aluminum tariffs, namely, China. The real purpose is to exert pressure on China and force China to make concessions on market access and technology transfer.
Feldstein believes that it is China’s access to U.S. company’s technology that really hurts the U.S. interests. China requires some U.S. companies to share their technology in order to gain eligibility for entering the Chinese market. This has caused huge losses for U.S. companies.
According to the report of the First Financial Report, analysts at TrendForce, a global market research organization, also believe that from a macro perspective, the Sino-US trade war reflects the concern of the United States about the rapid rise of China's science and technology industry, especially the rise of China's integrated circuit industry. Worry about it.
Imagine if one day, China's integrated circuit products no longer rely on the United States or achieve autonomous control, which has a huge impact on the US technology industry.
It is worth mentioning that, according to the "Wall Street Journal" report, the US government is researching and launching a new 301 investigation for retaliation against the restrictions imposed by US technology companies such as cloud computing service providers in conducting business in China.
In specific retaliatory measures, the United States may limit Alibaba's provision of cloud computing services in the United States or prevent Alibaba’s further expansion in the United States until China removes restrictions on US companies.
04 Chinese core or will counterattack
In recent years, with the dual support of policies and funds, the development of Chinese chip companies has achieved certain results.
In June 2014, the State Council issued the "Outline for Promoting the Development of the National Integrated Circuit Industry", which set a strategic goal for realizing the leap-forward development of China's chip industry in a relatively short period of time.
Just two months later, 15 companies including China State Finance, China Tobacco, and China Mobile have jointly established a national fund to finance key links such as design, packaging, and wafer manufacturing in the chip industry chain. Support. The initial plan of the fund is 120 billion yuan, and the actual fundraising is close to 140 billion yuan. At the same time, the IC development fund set up by local governments at all levels exceeds 300 billion yuan.
Less than a year after its establishment, the “large fund” invested 40 billion yuan in 25 projects, including a group of leading companies in the domestic chip field, such as Ziguang, SMIC, ZTE, Changjiang Electronics, etc. As of 2017 At the end of the year, the national integrated circuit industry investment fund has invested more than 70 billion yuan, of which about 60% of the funds are invested in semiconductor manufacturing.
In 2017, China's chip industry also achieved some brilliant results: Huawei Hass released the world's first 10-nanometer technology AI chip; Supercomputer equipped with domestic chips 'Shenwei Taihu Light' won the world's super-computing field In three consecutive years, Ziguang and Hass rank among the top ten chip design companies in the world. Among the top 50 global chip design companies, Chinese enterprises have taken up 11 seats; Huawei has also successfully used a large number of Hass Kirin chips in high-end models. No longer subject to people.
Compared with the international advanced chip technology, China's chip industry still has a certain level of development. With the advent of the 5G era, China's chip industry in 2020 to completely get rid of foreign companies rely on there is still a certain degree of difficulty.
In an article on March 1st, People's Daily stated that 'China Core' wanted to face a real counter-attack and still faced many challenges. One was the technological gap, and the other was the weakness of the production level. However, this article believes that 2018 will become China. In the key years of 5G chip development, we believe that with strong policy support and the unremitting efforts of domestic manufacturers, China's 5G will surely lead the world in the near future.