The spectacle of one Chinese company requiring US permission to do business with another Chinese company perfectly illustrates the paradox of globalisation.
US President Donald Trump would be the first to admit that his core political platform is protectionism – i.e. seeking to protect domestic interests from foreign competition. The main focus of that strategy has been China and, notwithstanding legitimate concerns about state influence, Huawei has been the main tactical stick he has used to beat China with.
The great irony of all this is that Trump has used the tools of globalisation to advance his protectionist agenda. Specifically this has meant attempting to drive Huawei out of business by banning all US companies, equipment and intellectual property from being supplied to Huawei and even banning the use of anything remotely American in the manufacture of any products being sold to the vendor.
So now, according to Beijing News, China’s largest chip fab, Semiconductor Manufacturing International Corporation (SMIC), has applied to the US for permission to supply chips to Huawei. The reason it needs to do it is that some of the specialist machines used in chip fabs are made by US companies such as Applied Materials. Even though SMIC now presumably owns that kit, it still needs to ask President Trump for permission to use it.
The US presumably wouldn’t tolerate a situation in which Qualcomm has to apply to the Chinese government for permission to supply Apple, but that’s where we are. It’s hard to get much more detail from the report, since it’s written in Chinese, but what more is there to say. Given recent precedent we expect SMIC’s request to be denied, which would represent yet another humiliation for the Chinese government.