September 27, 2020: Facebook, OpenAI & Microsoft, Germany, Apple, Huawei

This issue covers the period between September 21 - 27, 2020 with six news stories – three from English language sources, three from Chinese language sources. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.

Before you go on, please check out last week's deep dive post: "300 Years: Huawei's Open Source Strategy"

“Facebook Takes Down Fake Pages Created in China Aimed at Influencing U.S. Election” (English Source: New York Times)

My Thoughts: The title of this article probably oversold China’s effort and investment in influencing this year’s US election. Reading the article closely, it’s clear the Pages that Facebook took down have had little success in gaining an audience and were made by groups that may not even be affiliated or funded by the government. The topics these Pages chose are mostly to plant division among the American electorate, not explicitly supporting or undermining the presidential candidates -- a strategy that the Russian government applied effectively in 2016 and is applying again in 2020. So as far as this election is concerned, worry of meddling from China is a valid but relatively minor one. If the goal is to sow division among Americans, the American president is doing a better job of that than just about any foreign power.

“Microsoft teams up with OpenAI to exclusively license GPT-3 language model” (English Source: Microsoft Official Blog)

My Thoughts: This licensing agreement between Microsoft and OpenAI is somewhat expected, given that Microsoft is a big strategic investor in OpenAI and all of OpenAI’s new models and APIs are already running on Azure. It’s still noteworthy because I think it signals a tectonic shift in the cloud industry landscape, even though it'll take a few more years to materialize in earning statements. Because the market leader AWS had a 7-year-long head start, every other cloud platform is trying to both catch up in terms of market share and differentiate in terms of product. This exclusive agreement will give Microsoft Azure the differentiation it needs to become the “AI Cloud” in the market. AI has always been the calling card of Google, but Microsoft appears to be moving much more quickly to productize AI into its cloud. For a deeper dive on what I think of GPT-3 the technology, please see “GPT-3: An Abstraction of Time vs Money”.

“Merkel Resists Full Ban on Huawei, Making Germany an Outlier” (English Source: Bloomberg)

My Thoughts: Merkel’s unwillingness to “follow the herd” in banning Huawei is a welcoming sign, not necessarily for Huawei, but for the larger challenge of regulating cross-border technology product overall. Germany’s regulatory framework is still being deliberated, which does not mean Huawei won’t get banned. What it does mean is that Merkel is intent on doing the hard work of designing a generalized framework beyond singling out one company. It’s work that major countries, including the US, China, and UK have thus far all failed to do, while other countries look for guidance and leadership. Just like software, if a regulatory framework is well-designed and well-reasoned, it can be exported too!

“As Apple quietly cuts back on manufacturing in China, what will happen next?” (Chinese Source: Geek Park)

My thoughts: While it’s hard to verify the information in this post, it looks like some of Apple’s lower end supply chain is indeed moving from China to India. Earlier this Spring, I wrote a post questioning the practicality of a supply chain decoupling by Apple away from China -- given both the tight integration and high manufacturing quality in China. What I failed to account for is just how complex the supply chain is that goes into an iPhone, thus certain less value-add portions could be peeled away to lower cost, less experienced countries. Interestingly, the manufacturers doing the moving are still the Foxconn’s of the world -- same companies expanding into new locations. Another interesting angle is the places they are expanding to -- not just India, but also Vietnam and Mexico. So “decoupling” may end up being “location diversification” for these manufacturers and suppliers to both reduce cost and strengthen their resilience against future geopolitical shocks.

“HSMC suspected of ‘removing and restarting’; Why do domestic semiconductor manufacturers encounter so many difficulties?” (Chinese Source: InfoQ)

My thoughts: I’m mildly regretting giving HSMC (Wuhan Hongxin Semiconductor Manufacturing) so much ink in my first deep dive into the Chinese semiconductor space in “RISC-V, China, Nightingales”, because it now looks to be a total sham. This article shared that HSMC is supposedly sending its top engineers (any one who hasn’t quit yet) to the province of Guangdong under a different semiconductor company, while planning to shut down its operation in Wuhan. Guangdong, being the entrepreneurial and enterprising province that it is, has seen a massive spike in new semiconductor companies in the last eight months, along with quite a few other provinces. Will this “gold rush” for government subsidies doom China’s search for technological self-sufficiency?

“Who is OpenHarmony for?” (Chinese Source: YuanChuan Tech Forum)

My thoughts: This commentary is even more pessimistic than my own thoughts on Huawei’s OpenHarmony and overall open source strategy discussed in last week’s deep dive post: “300 Years: Huawei's Open Source Strategy”. The pessimism is not without precedence. The mobile operating system landscape is littered with failures to unseat the duopoly of iOS and Android, like Microsoft’s Windows phone and Samsung’s Tizen. This post has the correct analytical framework in that a mobile operating system can only take off if it has a strong hardware ecosystem to lean on, which Huawei is lacking due to all the semiconductor sanctions. Carving out a niche in IoT or AIoT (AI + IoT) may help OpenHarmony’s adoption somewhat, since it was originally built to be an IoT operating system. IoT technology, both software and hardware, has a relatively lower barrier to entry. Huawei is in this for the long haul though, so no sentiment, optimistic or pessimistic, will be proven out for years or decades, if not centuries.

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