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Tech Trends: 2021 – Part 2

Geopolitics, Big Tech regulations and Blockchain would be burning issues across the technology landscape in 2021

The technology landscape for 2021 will be dominated not only by scientific advancements, but by geopolitical currents as tensions between US, China and Russia increases; stricter global regulatory environments with concerns over data privacy and unprecedented sophistication of cyber-attacks; and governments’ attempt to curb the overwhelming influence of Big-Tech that is threatening to rival the power of the state itself and this is resulting in friction that is bound to grow in the coming years.

Geopolitical tensions

The latest round of massive state sponsored hacking into US government institutions, including the Pentagon, and hundreds of Fortune 500 companies, allegedly coming from Cozy Bear, the hacking arm of Russia’s foreign intelligence service, the SVR, known as Software Supply Chain Attack, have sparked another round of diplomatic row between the two countries. When the US President-elect Joe Biden assumes office in mid-January 2021, he’ll have to respond with some tough measures as otherwise he’ll be viewed as going soft on Russia.

China, however, is a different ball game altogether. The US has accused it of stealing technology for several years to build its own copy-cat business such as Baidu, Alibaba & Tencent by disallowing US social media companies from entering its markets. The outgoing US president Donald Trump has retaliated but preventing any US or global company, using US technology to manufacture semiconductors, from selling to any Chinese company. This has severely impaired China’s technological ambitions to rival the US’.

The move has forced Huawei, China’s biggest telecom company, to curb its ambition to lead the mobile handset market. Far for serious is the impact on its plans to win the global 5G race. US, the UK, several European countries and India are pulling our Huawei equipment from their networks. While Biden has not detailed a specific Huawei strategy, he has said he will put global cooperation at the centre of efforts to counter China’s tech offensive: “To win the competition for the future against China or anyone else, the United States must sharpen its innovative edge and unite the economic might of democracies around the world,” Biden wrote in a piece outlining his foreign policy in Foreign Affairs in March. He said the U.S. needs to “get tough” to counter intellectual property theft and state subsidies that give China an “unfair advantage.”

Seismic changes in Semiconductor industry – China’s big vulnerability

The semiconductor industry is in the throes of a major reset. The next five years will see new chip architectures to handle the spread of deep learning and store and process the explosive growth in sensor-generated real-time data at the edge. There will be new programmable networking chips for 5G data centres and an intensifying drive by China to create a semiconductor supply chain free of US design and production technology by 2030. The Communist country realizes that it’s ambition to lead the world in technology hinges on availability of advanced semiconductors; and this is where it is most vulnerable.

There will be breakthroughs in the use of 3D layering of integrated circuits and chipset packaging to keep Moore’s law going, without suffering from Moore’s second law (which states that the cost of a semiconductor chip fabrication plant doubles every four years). Chips modelled on the human brain’s meshing of processing and memory will address the problem of using up to 80% of a processor’s time and energy moving data to and from storage.

A proliferation of embedded micro data centres will drive increasing numbers and varieties of progressively autonomous connected IoT devices. These range from smart traffic lights and autonomous vehicles to wearable biosensors and augmented reality (AR) headsets.

Realizing that its access to US technologies will be cut off, China is now putting a multi-year counterstrategy in place to upgrade its digital infrastructure and wean itself, as far and as quickly as possible, off reliance on US software and hardware inputs. China and the US will embark on a porous, complex, and protracted decoupling over the coming decade.

A $1.4 trillion state program has been announced to support R&D in key enabling technologies over the next five years. These include semiconductors, artificial intelligence (AI), robotics, 5G and 6G, data centres and cloud, supercomputing, quantum computing technologies, and low-earth orbit satellites. However, without access to the most advanced semiconductors (5-3 nanometres) from TSMC (Taiwan Semiconductor Manufacturing Company) which comes under the US ban as it uses US machinery to make the chips, China will find its plans difficult to achieve. Currently its own semiconductor capabilities are only at 14 nanometres, which is far less powerful that what TSMC, which produces 50% of world supplies, manufactures.

China’s most significant chip companies, led by Huawei’s HiSilicon subsidiary and SMIC, depend on US-developed electronic design automation (EDA) software and production equipment. The latter is fundamental to any chip-making plant, including those operated by the world’s leading chipmaker, TSMC, to which Chinese companies have to turn to make their most advanced chips. The biggest obstacle is that China suffers from a severe deficit of skilled managers and engineers. The semiconductor skills shortfall is estimated at 400,000 suitably qualified professionals.

Blockchain to become mainstream

COVID-19 pandemic has amplified the need for technologies that help improve trust in data and assets, remove operational inefficiencies from business processes and boost the resilience of supply chains, where blockchain/DLT (Distributed Ledger Technology)  plays a key role alongside AI (Artificial Intelligence), IoT (Internet of Things) and data analytics. It should further spur market activity and adoption across industries, including the least digitized ones. For example, agri-tech start-up GrainChain and global payment giant Mastercard have recently partnered to ‘upgrade’ soft commodity markets with blockchain capabilities and boost supply-chain resilience and sustainability, as well as fair trade in these markets, across the US and Latin America, and potentially further geographies.

Blockchain/DLT will be among the topmost priorities for organizations. Although mainstream adoption is still in the early stages, more than two-thirds of companies surveyed by 451 Research indicate that blockchain/DLT will be among their organization’s top five strategic priorities in the next three years.

In 2020 there were a number of announcements about significant investments, as well as prominent partnerships and deployments across a breadth of use cases, addressing critical business and industry-level challenges – all pointing to a maturing market that is gaining strategic importance. The 451survey showed that 68% of respondents are confident about blockchain/DLT being in their organization’s top five strategic priorities in the next three years (see Figure 3). This number is 84% among the most data-driven companies – those organizations that self-report they are making nearly all their strategic decisions based on data.

IBM and Oracle upgraded their blockchain-as-a-service platforms – both underpin some prominent live business networks – to accommodate evolving customer demand, and new platform offerings were launched, including IT service provider First Genesis’ cloud-native Xenese platform and Intellect EU’s Catalyst Blockchain Platform.

Notable partnership announcements include VMware becoming an investor in smart-contract firm Digital Asset, as well as the Eclipse Foundation teaming up with the IOTA (IOTA is the first distributed ledger built for the “Internet of Everything” – a network for exchanging value and data between humans and machines)  team to drive commercial adoption of the permission-less IOTA distributed ledger protocol, in areas such as digital identity and decentralized marketplaces. Blockchain software house ConsenSys got hold of JPMorgan’s Quorum protocol and launched the ConsenSys Quorum brand, which consolidates the company’s enterprise Ethereum protocol technology into a single offering.

Tighter Regulations for Big Tech

Big Tech has grown too big and has been on the cross hairs of governments across the world for a while now. The complaints against these companies range from influencing citizens on political issues, to being anti-competitive and having an adverse impact on innovation as they gobble up any company coming up with an innovation that threatens their dominance. The fact that Big Tech has grown even more financially strong during Covid19, when most other businesses were suffering has drawn some unwelcome attention from the regulators.

On 6 October 2020, the US House Judiciary Committee’s Antitrust Subcommittee released its investigation into the digital economy, reporting that the main four Tech companies – Amazon, Apple, Facebook and Google – all were monopolies across specific markets, an accusation the four companies rejected. There is now a growing consensus worldwide regarding the need for better regulation of the digital economy, and the next debate will be on which tools and remedies must be used to improve competition, especially as global companies continue to diversify while leveraging their core market strengths.

Even the Chinese authorities have become wary of Alibaba’s growing influence in every aspect of life in the Mainland and Hong Kong. They have cracked down on the company, stopped its affiliate company Ant from issuing the world’s largest IPO in the Shanghai Stock Exchange. The IPO would have valued it at more than $310 billion, making it worth more than major US investment banks such as Goldman Sachs (GS) and Morgan Stanley (MS). The company sells an array of financial products in China and its payments arm, Alipay, is the country’s biggest payments platform.

One of the trends noticed is that tech companies are acting more and more like nation-states, sometimes being stronger than many countries, and at other times believing they should be left alone because they ultimately benefit the common good. For instance, in the same week as the US House report, Facebook released its own report saying that breaking it up would be impossible and would cost billions of dollars, and while the company is allowed to defend its interests, it should not be the one deciding how it should operate. Companies have to be more open and realise that regulation will necessarily be a part of their day-to-day operations, otherwise it will leave regulators with only one option to ensure competition: structural separation or breaking them up.

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