LIVE FROM CANALYS CHANNELS FORUM, HONG KONG: Canalys CEO Steve Brazier explained a tit-for-tat trade dispute between China and the US is likely to lead the former to reduce its reliance on US-made semiconductors in favour of silicon from South Korea and Japan.
In the opening presentation here, Brazier noted China buys around $200 billion-worth of semiconductors from the US annually, but had already begun shifting its supply chain away from the country in the face of rising US tariffs. In Q3, China increased imports of semiconductors from South Korea by 7.8 per cent, he noted.
However, he explained this is two-way traffic, with many companies already shifting manufacturing away from China to countries such as Malaysia, Vietnam and Cambodia. This shift has the potential to reshape global supply chains he said.
While Brazier expects China to favour Asia-Pacific based suppliers, Chinese authorities are pushing for a reduction in the country’s reliance on overseas suppliers: in April, senior government officials reportedly held meetings with industry representatives, regulators and a state-run semiconductor investment fund to discuss accelerating a plan to become self-sufficient in core technologies including chips.
Looking at an increasingly complex global political environment, Brazier said it is “absolutely nonsense” for technology companies to attempt to remain non-partisan.
“CEOs are having to take decisions about where they position their company and the culture of the company.”
He noted that as the world becomes more nationalistic this may become a bigger issue, adding: “at what point, when things that are bad are happening, do you have a duty to speak out? It will be harder and harder not to pick a battle.”
Beyond politics, Brazier made a number of predictions: Alibaba Cloud will become the largest public cloud in Asia-Pacific in 2019 (without including China, it will still be the third biggest in Asia); Alibaba will overtake Amazon Business in Southeast Asia by 2020; and India will become the fifth largest IT market by 2021, overtaking UK and France.
He also expects Apple to use its own SoCs in Macs by 2020 – on all but Mac Pro models.
Distributors are seeing healthy growth, 8 per cent year-on-year across Asia and 15 per cent in China in H1, he said.
A major driver of that growth is the move to adopt digital security standards, with Singapore launching the National Cyber Security Act, and China, Indonesia, Thailand and Vietnam also drafting new laws. “The need to protect data is going up and up,” he said.
Brazier noted smart speakers is the fastest growing category, enabled by voice platforms, which are going to be a major competitive area. While they are mainly in smart speakers today, “we are seeing voice impact other areas…voice will be used to turn on the TV, close the curtains or lock the doors”.