Tech after Trump: What a Biden victory means for Asia

Tech after Trump: What a Biden victory means for Asia

Joe Biden will move into the White House on January 20th, and will by and large breathe a sigh of relief for the global tech industry. Hopes are high that the Democrat, who won the highly competitive US presidential election just over a week ago, will oversee an easing of tensions with China and restore much-needed stability to the economy.

But there are also questions about Mr Biden, including how he intends to curb big tech in America and how much leeway he will have to implement his policies if his party fails to gain control of the Senate.

After four volatile years under President Donald Trump, there are four ways the lives of chipmakers, smartphone makers, internet giants and more around the world could change.

US-China tech decoupling too slow?

One of the tech world’s greatest hopes for Mr. Biden is that he will reverse, or at least slow down, the decoupling of the U.S. and Chinese supply chains.

Since the US blacklisted Huawei Technologies last year, US suppliers to the Chinese technology giant have lost billions in revenue. This year, the Trump administration’s broader crackdown on Chinese tech companies, including TikTok, has hurt the American tech sector even more as Silicon Valley fears worsening tensions will lead to retaliation from Beijing and create additional difficulties for their cross-border businesses would company.

This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, business, economics and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section extensively delves into 300 of the largest and fastest growing public companies from 11 economies outside of Japan.

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Industry stakeholders and experts say Mr. Biden is less likely to push for such decoupling and will bring a wider range of strategies to his dealings with Beijing.

“I think Biden will continue to be tough on China, but he will think a little more strategically and consider what kind of relationship we want with China,” said Orit Frenkel, a former trade negotiator with the United States Trade Representative’s office and now executive director of the Washington-based advocacy group American Leadership Initiative. Mr Trump’s approach to China, including raising tariffs, has caused collateral damage to US companies, Ms Frenkel added.

But even under Mr Biden, technical competition between the two superpowers will continue to intensify as the US continues to view China’s growing technological capabilities and America’s dependence on its supply chain as national security concerns.

“Biden wants to bring more supply chain back to the US. This is one way to help rebuild the American economy. But he’s not going to be as draconian as Trump, ”said Darrell West, vice president and director of governance studies at the Brookings Institution, a Washington-based think tank.

What is unlikely to change is the major supply chain shift out of China sparked by the Trump administration’s tariff hikes and raids against companies like Huawei.

Apple, HP, Dell, and Google have asked their suppliers to help prepare manufacturing options outside of China, while many major electronics companies have expanded their manufacturing bases in many Southeast Asian countries, Taiwan, and India.

Simon Lin, chairman of Wistron, an iPhone assembler and supplier to Acer, HP, and Dell, believes this shift will survive the trade war that started it. “This massive trend towards diversification is not going to change in the long term,” he said.

Apple’s plans to move more manufacturing capacity to India and Vietnam will also continue regardless of who sits in the Oval Office, according to people familiar with the U.S. company’s plans.

“The diversification of risks is the main objective in the long term. [Apple’s] The Indian project continues. It won’t change based on the US election results, ”a supply chain source told Nikkei Asia.

Friendlier Politics for Foreign Talent?

Closer to home, Mr Biden could reverse some of the recent immigration policies that have made it difficult for major American tech companies to hire and retain foreign talent.

Of particular note is the H-1B work visa program, which is primarily used by Silicon Valley tech companies to recruit highly skilled immigrants. The majority of H-1B visas are issued to Chinese and Indian nationals, but in June the US suspended these and other work visas. This was followed by rule changes announced last month that increased the requirements for H-1B applicants.

The Trump administration’s unfriendly attitude towards immigration has resulted in an increasing number of technicians leaving the country, voluntarily or involuntarily.

“We don’t live in the 1920s anymore. It’s a global economy and we have to be competitive, ”said Diane Hernandez, immigration attorney at Hall Estill law firm.

Mr. Biden will “not make it harder” for tech companies to recruit foreign talent, said Hernandez, as the priority will be to help US tech companies stay globally competitive. However, she also expects his administration to make some changes to employment-related immigration policy over the next four years, including the H-1B program.

“Biden is more conservative or conservative [moderate] Side when it comes to employment-related immigration issues, ”she added.

Investment plans pending review?

A change in president will also have a big impact on individual companies hit by Trump’s dual goals of curbing China’s technological rise and restarting US manufacturing.

Two of the largest Taiwanese technology companies – Foxconn, the world’s largest manufacturer of contract electronics, and Taiwan Semiconductor Manufacturing Company, the world’s largest manufacturer of contract chips – have committed to significant investments in the US under Trump.

However, Foxconn’s initial promise to invest $ 10 billion in Wisconsin to build a giant exhibition facility and television assembly line has been repeatedly scaled back, a fact that Trump’s Democratic rivals were quick to grasp. Bringing manufacturing jobs back to the US was one of the president’s pledges, and failure to comply with those rules didn’t help him in the election: Mr Trump lost the state by a narrow margin.

Meanwhile, in May, TSMC announced its intention to build a $ 12 billion advanced chip facility in Arizona, another battlefield state that Mr. Trump narrowly lost.

Just two weeks before voting began in the US, Foxconn founder and former chairman Terry Gou released a statement promising to continue the company’s investment in Wisconsin, regardless of which candidate prevails “as long as it lasts federal, state and local policymakers feel obliged to Foxconn ”.

However, Mr Biden’s victory raises questions about whether the investment terms for both projects will be renegotiated.

Like Foxconn and TSMC, Samsung Electronics invested in the US during the Trump administration in a politically cheap home appliance factory in South Carolina. The investment was announced just days before Samsung’s de facto chief executive met the president in 2017.

Now the South Korean company might have reason to welcome Mr Biden – despite being one of the earliest winners of Mr Trump’s trade war. The smartphone and chip titan saw robust sales while its Chinese rival Huawei struggled under the Washington crackdown, but its management has failed to appreciate the uncertainty of the past four years.

A Samsung executive said Mr Biden’s support for free trade and multilateralism should help the company grow as more than 80 percent of its sales come from overseas markets.

“We have grown through the globalization of trade. Many of our companies rely on global value chains, ”said the executive, who asked not to be named.

More money, more rules?

With regard to domestic technology policy, Mr. Biden is committed to investing heavily in new technologies as part of his “Buy American” business agenda. The plan allocates $ 300 billion to new technologies ranging from electric vehicles and lightweight materials to 5G and artificial intelligence – areas where China is rapidly gaining trustworthiness.

“I think there would be a lot more support for the technology sector under a Biden administration,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, a Washington-based public policy think tank.

“We will receive significant funding from the National Science Foundation or other federal agencies to support developments such as AI, quantum computing, and intelligent manufacturing. There would be more money to roll out 5G, ”he said.

However, Mr Biden and his elected Vice President Kamala Harris were also outspoken critics of the technology sector, calling for more regulation, especially for social media giants like Facebook.

Mr Biden has also called for a minimum income tax for companies like Amazon.

“Biden has concerns about competition policy, cybersecurity, privacy, and various other issues. I think there would be more government oversight of the tech sector, ”West said at Brookings.

Additional coverage from Lauly Li, Cheng Ting-Fang and Kim Jaewon

A version of this article was first published by Nikkei Asia on November 9, 2020. © 2020 Nikkei Inc. All rights reserved

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