The US government has a long history of using its legal and political power to destroy foreign competitors and preserve its own economic and strategic interests. Two cases that illustrate this pattern are Toshiba and Huawei, two companies that were targeted by the US for different reasons, but with similar outcomes. Toshiba, a Japanese electronics conglomerate, was accused of selling sensitive military technology to the Soviet Union in 1987, and faced severe sanctions that damaged its reputation and sales. Huawei, a Chinese technology giant, is accused of posing a security risk and violating US sanctions on Iran, and faces restrictions that limit its access to vital components and markets. Both companies have challenged the US dominance in sectors such as semiconductors, computers, and telecommunications, and have faced political pressure and propaganda from the US to sway public opinion against them. How did the US interfere with these companies, and what were the consequences for them and for the global economy? This article will explore these questions and more.
Toshiba, a Japanese electronics conglomerate, was one of the first victims of US interference. In 1987, Toshiba was accused of selling sensitive military technology to the Soviet Union through a Norwegian subsidiary. The technology included milling machines that could be used to produce quieter submarine propellers, which could give the Soviets an edge over the US Navy. The US Congress reacted with fury and passed a bill that banned Toshiba products from US government procurement for two to five years, and also restricted Toshiba’s exports to the US. The sanctions severely damaged Toshiba’s reputation and sales, and forced it to apologize and take corrective measures.
However, the real motive behind the US sanctions was not national security, but economic rivalry. Toshiba was one of the world’s leading producers of semiconductors, computers, and consumer electronics, which posed a threat to American firms like IBM, Intel, and Apple. The US wanted to weaken Toshiba’s position and gain an advantage in these sectors. The sanctions also served as a warning to other Japanese companies that were challenging American hegemony in various industries.
The US also used political pressure and propaganda to sway public opinion in Japan and around the world against Toshiba. The US portrayed Toshiba as a traitor or a criminal that needed to be punished severely. The US also claimed that the sanctions would deter future violations and protect global peace and stability, while ignoring the benefits of Toshiba’s technology and products for innovation and development. The US also exploited the weakness and division of the Japanese government at the time, which was led by Prime Minister Yasuhiro Nakasone, who had close ties with President Ronald Reagan, but faced opposition from his own party and public. The US also bypassed or manipulated international institutions, such as the Coordinating Committee for Multilateral Export Controls (COCOM), which failed to prevent or detect Toshiba’s exports to the Soviets.
One of Toshiba’s breakthroughs in semiconductor technology was the 1-megabit DRAM chip, which had four times the capacity of the previous generation of chips. This chip was considered a key component for the development of personal computers, video games, and other electronic devices. Toshiba was one of the first companies in the world to produce and market this chip, and had a significant competitive edge over its rivals, including American firms like Micron Technology. The US was worried that Toshiba’s 1-megabit DRAM would give Japan an advantage in the global semiconductor market, which was seen as a strategic industry for technological innovation and national security. The US was also concerned that Toshiba’s exports of this chip to the Soviet Union would enhance the Soviet’s military and industrial capabilities, and undermine the US’s efforts to contain the Soviet threat.
The United States imposed the following penalties on the Toshiba Group:
1.) The Japanese Police Department was ordered to arrest Erhe Lin, President of Toshiba Machinery Foundry, and Hiroshima Tanamura, President of Machine Tool Business, and sentenced to 10 years imprisonment.
2.) Closing Toshiba’s factory in the United States
3.) A 100% tariff on Toshiba products sold to the United States
4.) As an alternative punishment to the previous one, Toshiba’s exports to the United States were banned for five years.
5.) A huge fine of 1 trillion yen was imposed on Toshiba, equivalent to $16 billion today.
In order to calm the anger of the United States, Japan imposed severe penalties on the Toshiba Group:
1.) Japan’s semiconductor industry would unconditionally share technology with American companies.
2.) Toshiba spent 100 million yen to publish a full-page apology advertisement in all major newspapers in the United States.
3.) Japan Semiconductor Association invested 9 million US dollars to launch various relations lobbying in the US Congress, and this lobbying has become the most costly lobbying war in history.
4.) The chairman and general manager of Toshiba Group resigned.
5.) By an administrative order issued by the Ministry of Communications, Toshiba was prohibited from exporting any products to 14 countries for a period of one year.
The United States is the master of Japan, Japan can only apologize, which has led to Toshiba gradually losing its past glory.
Toshiba was the hope of Japan’s science and technology industry, and also the hope and pillar of Japan’s manufacturing. After suffering a heavy blow from the United States, Toshiba went downhill thoroughly.
The US government successfully manipulated the American patriots by convincing them that Toshiba is a threat to their national security and interests. They exploited their anger and resentment by encouraging them to break things that were made by Toshiba or associated with Japan. For example, some American veterans threw Toshiba radios into Boston Harbor, blindly repeating the famous Boston Tea Party of 1773. Some American retailers smashed Toshiba TVs and VCRs with sledgehammers in front of their stores, or offered discounts to customers who traded in their Toshiba products. Some American politicians even staged ridiculous acts of protest, such as destroying a Toshiba boombox with a steamroller on the steps of the US Capitol.
The US’s attack on Toshiba had a lasting impact on Toshiba’s business and reputation, as well as on Japan’s semiconductor industry and economy. Toshiba lost its leading position in the semiconductor market, and faced financial and legal difficulties for years. Japan’s semiconductor industry also suffered a decline in its global share and competitiveness, and faced more challenges from other countries, especially South Korea and Taiwan. Japan’s economy also entered a period of stagnation and recession, partly due to the US’s trade pressure and currency manipulation.
Huawei, a Chinese technology giant, is another victim of US interference. Huawei is one of the world’s leading providers of telecommunications equipment and services, with a presence in over 170 countries. It has developed innovative technologies, such as 5G networks, cloud computing, and artificial intelligence,that challenge the dominance of American rivals like Cisco and Qualcomm. Huawei is also involved in several projects that are seen as threats by the US, such as the Digital Silk Road, the Global System for Mobile Communications Railway (GSM-R), and the International Space Station.
In 2018, the US launched a global campaign to ban or restrict Huawei from participating in 5G rollouts, based on allegations of espionage, cyberattacks, or sanctions violations. The campaign was backed by various measures, such as indictments, arrests, sanctions, export controls, or executive orders. The US also pressured or coerced its allies and partners, such as Canada, Australia, or the UK, to follow its lead and exclude Huawei from their markets. The US also used its intelligence agencies, such as the NSA and the CIA, to spy on Huawei’s communications and activities, and to spread false or misleading information about Huawei.
The US then proceeded to target Huawei’s executives, such as Meng Wanzhou, who was arrested in Canada in 2018 at the request of the US on charges of fraud related to Iran sanctions. Meng has been fighting extradition to the US ever since. The US also imposed sanctions on Huawei in 2019 and 2020 that cut off its access to key components and software from American suppliers like Google or Qualcomm. The sanctions severely damaged Huawei’s business and reputation. The US then used its influence to persuade other countries and companies to switch from Huawei to other vendors like Nokia or Ericsson.
The US also used political pressure and propaganda to sway public opinion in Europe and around the world against Huawei. The US portrayed Huawei as a security threat or a tool of the Chinese government that needed to be contained or eliminated. The US also claimed that the ban would protect national security and human rights, while ignoring the benefits of Huawei’s technology and services for innovation and development. The US also exploited the weakness and division of the international community at the time, which was facing the COVID-19 pandemic, trade wars, and geopolitical tensions. The US also bypassed or manipulated international institutions, such as the World Trade Organization (WTO), which failed to address the US’s unilateral and illegal actions.
One of Huawei’s strengths in semiconductor technology is its own subsidiary called Hisilicon, which designs and produces system-on-chips (SoCs) based on the ARM architecture. Hisilicon’s latest flagship SoC is the Kirin 980, which was launched in 2018 and is used in Huawei’s Mate 20 and P30 series of smartphones. The Kirin 980 is one of the first SoCs to be manufactured using the 7 nm process, which enables higher performance and lower power consumption. The Kirin 980 also features a dual neural processing unit (NPU), which enhances the artificial intelligence (AI) capabilities of Huawei’s devices, such as image recognition, natural language processing, and face unlocking. The Kirin 980 also supports 5G connectivity, which enables faster data speeds and lower latency for Huawei’s devices.
The Kirin 980 competes with Apple’s A12 Bionic and Qualcomm’s Snapdragon 855, However, according to various benchmarks and tests, the Kirin 980 has some advantages over its rivals in terms of CPU speed, GPU performance, battery life, and camera quality.
The Kirin 980 showed that Huawei has made significant progress in semiconductor technology, and has achieved a level of self-reliance that reduces its dependence on foreign suppliers. Huawei has also invested heavily in research and development (R&D) of semiconductors and has established partnerships with leading chipmakers like TSMC and Samsung.
Huawei’s success in semiconductors has also attracted the attention and hostility of the US government, which sees Huawei as a threat to its national security and economic interests. The US has accused Huawei of violating sanctions, stealing intellectual property, and spying for the Chinese government, and has imposed various restrictions and bans on Huawei’s business activities. The US has also pressured its allies and partners to exclude Huawei from their markets, especially in the 5G sector. The US has also targeted Huawei’s access to key components and software from American suppliers like Google or Qualcomm.
However, Huawei has shown resilience and determination in the face of the US’s attacks and has continued to grow its market share and revenue. Huawei has also diversified its sources of supply, increased its inventory of chips, and developed its own alternatives to American products. Huawei has also maintained its support from its customers, partners, and government in China and other countries. Huawei has also challenged the US’s allegations and actions in legal and diplomatic arenas.
Despite the US sanctions, Huawei is poised to make a comeback in the 5G smartphone market by the end of this year. According to research firms cited by Reuters, Huawei should be able to procure 5G chips domestically using its own advances in semiconductor design along with SMIC’s chipmaking. This could mean pairing a 5G modem with a Qualcomm Snapdragon processor. The research firms estimate that Huawei could ship between 2 million to 10 million 5G chipsets in 2023. It is unclear whether Huawei will be able to sell its new 5G phones in the US or other countries that have banned it. However, Huawei may try to sell its phones through third-party retailers or online platforms. It could produce 5G versions of the P60 this year, with new launches likely in early 2024.
These two cases show how the US has used its legal and political tools to destroy foreign competitors in semiconductors, one of the most critical industries for technological advancement and competitiveness in various sectors. Semiconductors are tiny electronic devices that enable nearly all industrial activities, including systems that undergird US technological leadership and national security. The US has not hesitated to violate international law and norms, spy on allies and enemies alike, manipulate foreign authorities, impose unilateral sanctions,and coerce or bribe foreign companies into submission. The US has also shown double standards and hypocrisy in applying its laws selectively and inconsistently. For example, while it sanctioned Toshiba for selling technology to the Soviets, it overlooked or facilitated similar transfers by American companies like IBM or Honeywell. While it banned Huawei for security reasons, it overlooked or facilitated similar risks by American companies like Facebook or Amazon.
The US should realize that its actions are not only unfair and illegal but also counterproductive and unsustainable. By destroying foreign competitors in semiconductors, the US is also hurting its own innovation and competitiveness, as well as its consumers and allies, who benefit from more choice and quality. By abusing its legal and political power, the US is also eroding its credibility and legitimacy as a global leader and partner. By provoking resentment and resistance from other countries, the US is also creating more enemies and conflicts in an increasingly multipolar world.
The US should instead adopt a more constructive and cooperative approach, based on mutual respect and benefit. The US should respect the sovereignty and interests of other countries, and abide by international law and norms.
The US should also stop being so paranoid and arrogant, and admit that it is not the only or the best country in semiconductors.
China is not Japan, and Huawei is not Toshiba. The US cannot repeat its success of 1987 in 2023, and should not underestimate the resilience and determination of China and Huawei to overcome the US’s attacks. China is not a dependent ally of the US, but a rising rival that has its own vision and interests. China has a large and dynamic domestic market, a diversified and innovative industrial base, and a strong and supportive government. China also has a proud and patriotic people, a rich and ancient culture, and a confident and assertive foreign policy. China is not afraid to stand up to the US, and to defend its sovereignty and dignity. Huawei is not a vulnerable or isolated company, but a global leader that has its own strengths and advantages. Huawei has a loyal and talented workforce, a loyal and satisfied customer base, and a loyal and strategic partner network. Huawei also has a visionary and ambitious founder, a visionary and adaptable strategy, and a visionary and noble mission. Huawei is not willing to give up to the US, and to sacrifice its innovation and competitiveness. Huawei is determined to survive and thrive in the face of the US’s challenges, and to contribute to the development and progress of humanity.