Biden aims to revamp US chip & telecom prowess amid China conflict

The November 2020 election of Joe Biden to become the 46^th President of the United States is having a number of sweeping effects. The most crucial one relates to the COVID-19 pandemic: Biden’s team has changed both tone and policy, and launched an aggressive, coordinated rollout of vaccines across the US population. Biden’s election will also have important impacts on communications network infrastructure markets, in at least two important ways.

First, US policy will continue to restrict much of the Chinese technology sector’s access to US supply chains; the US government will aim to minimize deployment of Chinese technology in both US communications networks and those in allied countries; and, US policy will support alternative technologies and companies that can help smooth the transition away from China. Implications: Huawei will see market share in the telecom sector decline markedly over the next 2 years; China will push harder on its own allies to purchase Huawei/ZTE gear; Huawei and ZTE will emphasize services and software more, and hardware less; China will explore many ways around the rules but see limited success without crucial chipmaking technology; Open RAN will see an accelerated adoption curve; US companies like Ciena, Cisco, and Infinera, and others (e.g. Fujitsu and NEC), will see telecom opportunities pick up significantly in 2H21 and 2022.

Second, the US will actively support the development of a semiconductor supply chain with more firm roots in the US mainland, and also aim to offset the growing global dependence on a single contract manufacturer (foundry), Taiwan-based TSMC. Implications: China will accelerate development of its own chipmaking industry and simultaneously use all means of political persuasion and bullying to bypass supply chain restrictions; Chinese hacking of the semiconductor sector will be more vigorous and aggressive than usual, both aimed at theft and at sabotage; China’s threats to invade Taiwan will get increasingly boisterous but not result in invasion through at least November 2022, instead remain aimed at extracting concessions; Intel and, to a much smaller extent, Samsung will benefit as the apparent risk of over-reliance on TSMC becomes clear; both US and European governments will focus R&D efforts at supporting alternatives to TSMC.