China has demanded that the US government require all US airlines to change the name of Taiwan in their computer systems to reflect China's stance that the island is Chinese territory, along with Hong Kong and Macau. The original deadline was May 25, but it was extended to July 25. Air Canada, Lufthansa, and British Airways have already done so. The White House termed the demand "Orwellian nonsense."
"The U.S. government should urge the relevant companies to scrupulously abide by the one China principle and rectify their websites as soon as possible," said Chinese Foreign Ministry spokesman Lu Kang, trying to isolate Taiwan.
Some will be tempted to write off China's demand as mere nationalistic bluster, but there are serious follow-on implications with respect to computer technology. The US foolishly plans on a quarterly corporate basis, but China plans long-term.
It wasn't that long ago that China stopped shipments of rare earths, necessary for semiconductors, iPhones, hybrid cars, and other high-tech products, first to Japan and then to the US and Europe. Rare earth refining is done on a large scale in only two places, China and a plant in Kuantan, Malaysia, the latter of which lies on the coast of the South China Sea which China believes "belongs to China," with China building military bases on reefs and islands to defend its historically-challenged claim.
All PC motherboard manufacturers worth worrying about are based in Taiwan: Gigabyte, ASUS, MSI, ASRock, ECS, Biostar, and Foxconn, with the last being the largest contract manufacturer. In case you don't know what a motherboard is, it's the large printed circuit board that all parts in a PC or Mac plug into. The essential elements of a PC are motherboard, processor, memory (a/k/a DRAM), storage (both hard drive and SSD), and power supply, with the motherboard containing Ethernet, wireless, and audio.
Foxconn, the largest private employer in Taiwan, is a major subcontractor for Amazon, Apple, Cisco, Dell, Google, HP, Intel, Microsoft, and other companies. It purchased Sharp, a major Japanese supplier of LCD televisions and monitors.
Other important Taiwanese companies in the computer sector include Compal Electronics, D-Link, Foxconn, FSP Group, JMicron, MediaTek, Nanya, Pegatron, Phison, Powerchip, Quanta Computer, Realtek, Seasonic, TSMC, UMC, VIA Technologies, Winbond, Wistron, and ZyXEL.
These are not household names for most people, but their computers, whether Windows laptop or desktop, Mac, Linux system, tablet, or smartphone, are full of components from these companies.
TSMC is the largest independent semiconductor foundry, with UMC being the third-largest (the American GlobalFoundaries is the second-largest). TSMC manufactures silicon products for Qualcomm (smartphone processors), NVIDIA (graphics for PCs), AMD (processors and graphics for PCs), Marvell (controllers for SSDs), MediaTek (wireless), and other companies. TSMC sometimes manufactures products for companies that have their own foundries, for example, Intel and Texas Instruments. Qualcomm and Samsung signed an agreement back in 1993 that prevents the latter from using its own processors in smartphones sold in the US market.
Nanya, Powerchip, and Winbond are DRAM manufacturers, supplying almost 4% of world production.
Quanta Computer is the largest contract laptop manufacturer, with Compal Electronics being the second-largest. Pegatron was the laptop manufacturer for ASUS in the past, owns ASRock, and is one of the contract manufacturers used by Apple for the iPhone. Wistron manufactures tablets, mobile phones and other devices for Microsoft.
Seasonic is the premier manufacturer of PC power supplies, selling both under its name and via OEMs such as Corsair. FSP Group is another important power supply vendor. PC power supplies are all made in China or Taiwan, though the best use Japanese capacitors.
Realtek supplies Ethernet, audio, and wireless chipsets for a large percentage of motherboards. VIA Technologies is the largest independent manufacturer of motherboard chipsets, albeit a fabless one.
Intel, JMicron, Marvell, Phison, Samsung, SandForce, SK Hynix, and Toshiba are the major manufacturers of SSD controllers -- SSDs are a combination of NAND, a controller, and usually DRAM to serve as a buffer -- though some of the aforementioned companies use their controllers only in their products.
ASUS and D-Link are major suppliers of wireless routers. ZyXEL supplies wireless routers to CenturyLink and other OEMs.
Televisions and monitors are a different story, with Samsung and LG, both South Korean companies, taking the top two slots in terms of sales. Chinese companies take the next three slots, followed by Sony.
Apple may be disliked by China due to the way it washes its hands of responsibility regarding its subcontractors. 18 workers at an Apple-subcontracted Foxconn plant killed themselves by jumping from the rooftop of the factory. Apple and Foxconn's solution was to install nets. Other Apple-subcontracted factories owned by Foxconn and Pegatron experienced explosions caused by aluminum dust, killing 4 and injuring at least 59, even though the hazards of aluminum dust have been known for years.
One does not have to be an IT consultant to realize that if China were to annex Taiwan, it would be able to squeeze the world with respect to virtually all computer systems. Remember that while US Navy ships and US military aircraft generally employ custom computers and electronics, the command and control centers of militaries around the world use largely off-the-shelf PCs.
China's action vis-à-vis Taiwan is the latest tactic in its "Made in China 2025" initiative, which is designed to allow China to become 70% technology independent by 2025. China is making leaps and bounds in computer technology because Chinese high-tech companies enjoy massive state backing.
AMD's joint venture with China, Tianjin Haiguang Advanced Technology Investment Company (THATIC), licensed AMD server processor IP, with production already started. ARM's joint venture with China, ARM Mini China, licensed ARM processor IP, with ARM's architecture being used in 90% of mobile devices. And the third company to manufacture processors with Intel x86 / AMD x86_64 technology, VIA Technologies, has a joint venture with the municipal government of Shanghai, Zhaoxin Semiconductor.
State-supported tech conglomerate Tsinghua Unigroup tried to buy a 15% stake in Western Digital, the largest hard drive manufacturer, but that fell through due to national security concerns. Then Tsinghua Unigroup tried to buy Micron, the fourth-largest NAND supplier -- Samsung, Toshiba, WDC, Micron, SK Hynix, and Intel supply over 99% of NAND -- but Micron declined for national security reasons. Yangtze Memory Technologies (YMTC), an affiliate of Tsinghua Unigroup, will be the first NAND supplier in China, with product expected in late 2018 or 2019. Wuhan Xinxin Semiconductor Manufacturing Corporation (XMC), another affiliate of Tsinghua Unigroup, is working on 3-D NAND, the state-of-the-art for NAND. SSDs require controllers, so China's Netcom arranged a strategic partnership with Marvell, a major supplier of controller chips. China's Innotron and Fujian Jin Hua Integrated Circuit (JHICC), which work on mobile DRAM and specialty DRAM, respectively, were both founded with the help of the Chinese government, but they have a lot of work to do to catch up with the West. Samsung, SK Hynix, and Micron currently supply over 95% of DRAM, with Nanya, Powerchip, and Winbond taking the next three slots.
Chinese President-for-life Xi Jinping told Chinese media that China will not accept the loss of "even one inch of the territory left behind by our ancestors," even though China is the only country that believes it has ever owned the entire South China Sea, with Taiwan residing at the northeastern edge. China severely restricts knowledge of inconvenient events such as the uprising at Tiananmen Square, because no new flowers of thought are going to be blooming.
Being able to control Taiwan's technology sector would immediately enable China to create a chokepoint for PCs, smartphones, and components for the entire world. And even if China didn't interrupt the supply of computers, it could embed backdoors in the hardware. Taiwan isn't perfect, but world leaders should understand what's at stake, as the West outsourced its technological soul many years back. The US, Canada, the EU, Australia, and Japan should immediately start an initiative to create computer hardware free of Intel's ME, AMD's Secure Processor, government spy agencies, and other potential backdoors, perhaps starting with ARM IP, with it being manufactured someplace other than China.