Manama: In the backdrop of Global IT spending of an estimated total of $4.2 trillion in 2021, an increase of 8.6% from 2020, businesses in Bahrain are now more focused on their digital transformation efforts in 2021 and see technology as key to differentiating their organization in an increasingly competitive digital economy.
The latest Gartner report shows IT spending is accelerating ahead of revenue expectations, and in the MENA region, spending is set to rise substantially year on year following the offset caused by the COVID-19 pandemic.
But businesses keen to focus on a digital-led, post-COVID recovery could find their plans disrupted as geopolitical tensions spill over to the corporate world. The widely reported global semiconductor shortage of the last year is an example of how politics have a real-world impact on business operations. The shortage has morphed into a global crisis, with some analysts predicting the shortage could last into Q2 2022.
This is partly due to tensions in US-China trade relations in the technology sector. The global electronics industry association SEMI has noted how US export control regulations could “ultimately undermine” the US national security interests by harming the semiconductor industry in the US and creating substantial uncertainty in the semiconductor supply chain.
The case of Huawei is a paradigm of these tensions—although not the only instance. The company remains on a US entity list ban under the premise of protecting US national security. When initially enacted, former US Attorney General William Barr was quoted by Bloomberg as saying that some private American businesses may be the problem for not doing enough to maintain American technological strength, suggesting that the US stance on Chinese companies like Huawei is more political in nature rather than a matter of cybersecurity credentials.
The ongoing schism between the US and China, if left to fester, imposes an undue burden on companies in Bahrain seeking access to cutting-edge technologies that meet global industry standards.
The current semiconductor crunch reflects this reality. Speaking at the 18th Huawei Analyst Summit earlier this year, its Rotating Chairman Eric Xu noted that US sanctions against Huawei have led to panic stockpiling among global companies. “In the past, companies were barely stockpiling, but now they are building up to three or six months’ worth of inventory … and that has disrupted the whole system,” he said.
Companies like Samsung have admitted that the chip shortage is hitting television and appliance production. In the auto industry, the shortage has prompted Ford, Volkswagen, and Jaguar Land Rover to shut down factories, lay off workers, and slash vehicle production.
It’s not just private companies or Asian countries being affected. Confrontational trade policies could prove detrimental to Western countries’ national and corporate interests. When the US banned Huawei access to the Google ecosystem on its mobiles, for example, the American company argued that forking Android into a “hybrid” version would put the OS at greater risk of being hacked, the very situation the US was trying to prevent. Sweden-based Ericsson has also come out against Western bans on Huawei 5G technology.
For now, the US-led policies seem to have done little to curb the rise of Chinese tech companies more broadly. In the semiconductor domain, reports cite how China is quickly developing alternatives to US chipset technology following recent trade bans. Huawei itself has announced plans to build a chip plant in Shanghai without using American technology, supporting its existing capabilities in its HiSilicon division.
More broadly, China is also now home to many of the fastest start-ups to reach a $1 billion valuation globally, which is particularly evident in the field of technology. Even in the case of Huawei, the US ban did not stop it from increasing its R&D investments last year, diversifying into electric cars, launching its own mobile operating system HarmonyOS, or pushing its Huawei Cloud services to become amongst the fastest growing in the world.
Bahrain’s tech transformation, whether through hyperscale data centers or a comprehensive fintech strategy, benefits from access to all forms of advanced technologies from both the East and West.
Open collaborations and partnerships have been a cornerstone to current digital infrastructure projects. Without access to an open ecosystem for IT innovation, technology shortages may become even more common, and organizations in Bahrain may not be able to reap the full benefits of their investments in digital infrastructure.
