Tech after Trump: what a Biden win will mean for Asia

Joe Biden is set to move into the White House on January 20, leaving the global tech industry, by and large, breathing a sigh of relief. Hopes are high that the Democrat — who was hailed as the winner of the tightly contested US presidential election just over a week ago — will oversee an easing of tensions with China and bring some much-needed stability back to business.

But there are also questions hanging over Mr Biden, including how he intends to rein in Big Tech in America, and how much scope he will have to implement his policies if his party fails to gain control of the Senate.

After four volatile years under President Donald Trump, here are four ways life could change for the world’s chipmakers, smartphone manufacturers, internet giants and more.

US-China tech decoupling to slow?

One of the greatest hopes the tech world has for Mr Biden is that he will reverse — or at least slow — the decoupling of US and Chinese supply chains.

Since the US added Huawei Technologies to a trade blacklist last year, US suppliers to the Chinese tech giant have lost billions of dollars in revenue. This year, the Trump administration’s broader crackdown on Chinese tech companies, including TikTok, has threatened to take an even bigger toll on America’s tech sector, as Silicon Valley fears that worsening tensions would draw retaliation from Beijing and create additional difficulties for their cross-border businesses.

This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.

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Industry participants and experts say Mr Biden is less likely to push for such a decoupling and will bring a wider range of strategies to his dealings with Beijing.

“I think Biden will continue to be tough on China, but he will be a little more strategic in his thinking and he is going to look more strategically at what kind of relationship we want with China,” said Orit Frenkel, a former trade negotiator with the Office of the United States Trade Representative and now executive director at Washington-based advocacy group the American Leadership Initiative. Mr Trump’s approach to China, including increasing tariffs, had caused collateral damage to US companies, Ms Frenkel added.

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Yet even under Mr Biden, tech competition between the two super powers is set to intensify further, as the US will continue to see China’s growing technological prowess and America’s dependence on the supply chain there as national security concerns.

“Biden would like to bring more supply chain back to the United States. It’s a way to help rebuild the American economy. But he’s not going to be as draconian as Trump has been,” said Darrell West, vice-president and director of governance studies at the Brookings Institution, a Washington-based think-tank.

What will probably not change is the great supply chain shift out of China, sparked by the Trump administration’s tariff increases and crackdowns on companies such as Huawei.

Apple, HP, Dell and Google have all asked their suppliers to help prepare “out of China” production options, while many key electronics companies have expanded their manufacturing footprints in many south-east Asian nations, Taiwan and India.

Simon Lin, chairman of Wistron, an iPhone assembler and supplier to Acer, HP and Dell, believes this shift will outlast the trade war that sparked it. “This massive trend toward diversification will not change for the longer term,” he said.

Apple’s plans to shift more production capacity to India and Vietnam will also continue regardless of who sits in the Oval Office, people familiar with the US company’s plans said.

“Diversifying the risks is the main goal for the long term. [Apple’s] Indian project will continue. It won’t be changed because of the US election results,” a supply chain source told Nikkei Asia.

Friendlier policies for foreign talent?

Closer to home, Mr Biden could roll back some of the recent immigration policies that have made it more difficult for America’s big tech companies to hire and keep foreign talent.

Of particular importance is the H-1B work visa programme used primarily by Silicon Valley tech companies to bring in high-skilled immigrants. The majority of H-1B visas are awarded to Chinese and Indian nationals but in June the US suspended the issuance of these and other work visas. This was followed by rule changes announced last month, raising the requirements for H-1B applicants.

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The Trump administration’s unfriendly stance towards immigration has driven a growing number of tech workers to leave the country, willingly or unwillingly.

“We are not living in the 1920s any more. It’s a global economy, and we have to be competitive,” said Diane Hernandez, an immigration attorney at law firm Hall Estill.

Mr Biden will “not make it more difficult” for tech companies to hire foreign talent, Ms Hernandez said, as the priority will be on helping US tech companies remain globally competitive. However, she also expects his administration to make some changes to employment-based immigration policies, including the H-1B programme, in the next four years.

“Biden tends to be a little more on the conservative or [moderate] side when it comes to employment-based immigration issues,” she added.

Investment plans up for review?

A change of president also has big implications for the individual companies caught up in Mr Trump’s twin goals of curbing China’s tech rise and rebooting US manufacturing.

Two of the biggest Taiwanese tech companies — Foxconn, the world’s biggest contract electronics manufacturer, and Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker — both committed to significant investments in the US under Mr Trump.

However, Foxconn’s initial promise to invest $10bn in Wisconsin to build a massive display plant and television assembly line has been repeatedly scaled back, a fact that Mr Trump’s Democratic rivals were quick to seize on. Bringing manufacturing jobs back to the US was one of the president’s campaign pledges and failure to deliver on it did not help him at the polls: Mr Trump ended up losing the state by a slim margin.

Meanwhile, TSMC announced in May its intention to build a $12bn advanced chip facility in Arizona, another battleground state that Mr Trump narrowly lost.

Just two weeks before voting began in the US, Foxconn founder and former chairman Terry Gou released a statement pledging to continue the company’s investment in Wisconsin no matter which candidate prevailed, “as long as policymakers at the federal, state and local levels remain committed to Foxconn”.

Mr Biden’s win, however, raises questions over whether investment terms will be renegotiated for both of these projects.

Like Foxconn and TSMC, Samsung Electronics also invested in the US during the Trump administration, in its case in a politically favourable home appliance plant in South Carolina. The investment was announced just days before Samsung’s de facto chief met the president in 2017.

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Now, the South Korean company may have reason to welcome Mr Biden — despite being one of the early winners of Mr Trump’s trade war. The smartphone and chip titan has enjoyed robust sales while its Chinese rival Huawei struggled under Washington’s crackdown, but its management has not appreciated the uncertainty of the past four years.

A Samsung executive said Mr Biden’s support for free trade and multilateralism should help the company grow, as more than 80 per cent of its revenue comes from overseas markets.

“We have grown through globalisation in trade. Many of our businesses rely on global value chains,” said the executive, who asked not to be named.

More money, more rules?

In terms of domestic tech policy, Mr Biden has pledged to invest heavily in new technologies under his “Buy American” economic agenda. The plan includes $300bn for new technologies ranging from electric vehicles and lightweight materials to 5G and artificial intelligence — areas where China is rapidly gaining cachet.

“Under a Biden administration there would be much more support for the technology sectors, I believe,” said Rob Atkinson, president of the Information Technology and Innovation Foundation, a Washington-based public policy think-tank.

“We will see significant funding through the National Science Foundation or other federal agencies to support developments like AI and quantum computing and smart manufacturing. There’d be more money towards rolling out 5G,” he said.

However, Mr Biden and his vice-president-elect, Kamala Harris, have also been open critics of the tech sector and called for more regulations, especially for social media giants such as Facebook.

Mr Biden has also called for a minimum federal income tax aimed at companies such as Amazon.

“Biden has concerns about competition policy, cyber security, privacy and several other aspects. So I think there would be more government oversight of the tech sector,” said Mr West at Brookings.

Additional reporting by Lauly Li, Cheng Ting-Fang and Kim Jaewon

A version of this article was first published by Nikkei Asia on November 9 2020. ©2020 Nikkei Inc. All rights reserved

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