Our Way or The Huawei? Tech Cold War Exposes US Firms to New Risks

by: The Knowledge Group

May 28, 2019


The Trump administration has followed through on threats to blacklist Huawei this month.

Huawei, second only to Samsung in world Android smartphone production, was one of the rare hardware partners with early access to new Google and Android innovations. Now Huawei will only have access to the public versions, and it’s cut off from offering Google apps. Semiconductor companies Xilinx, Qualcomm, and Broadcom have announced a moratorium on supplying Huawei, noted Bloomberg News.

China might be forced to postpone its rollout of 5G, holding up 5G network adoption worldwide. That will slow demand for new smartphones. New, 5G- dependent technologies, such as self-driving cars, will be hindered as well.

Expect China to supercharge its mission to create its own smartphone operating system, says Tim Culpan, a Bloomberg opinion columnist—“creating a digital iron curtain” that separates people into distinct technological hemispheres.

Risk Management and Cyber Insurance

The shares of multiple U.S. semiconductor exporters fell significantly in the wake of the news, underscoring the uncertainty for multinational businesses facing the winds of tariffs and trade wars.

Donald Trump campaigned for the U.S. presidency partly on trade protectionism and is following through on the promise. Yet business leaders are at risk in times of escalating trade wars.

When companies are at risk of retaliatory measures, they need to prepare for job losses and decreases in market shares. Moreover, if a U.S. company’s supplier operates in a country hit by trade barriers or acts of war, its products can become too costly to manufacture.

Trade Protectionism Raises the Stakes

Data itself will face new international risks. This is inevitable when the safest mechanisms to manage and protect data flows occur through trade deals.

While firms continue to face cyber-security threats, trade wars could also disrupt business operations and make U.S. business more vulnerable to data breaches. On Tuesday, June 4, The Knowledge Group hosts an online CLE Cyber Liability Webinar.  Join us at noon to 1 p.m. on June 4 to examine trends and new risks in cyber insurance.