Technology Sovereignty and Realpolitik

Sovereignty used to be perceived as a geographic and military concept where dependence and coercion was exercised through military might, writes Dr Hermann Hauser.  

However, COVID-19 revealed our dependence on China for masks and PPE. President Trump demonstrated how US technology and payment systems can be weaponised. Thus Technology Sovereignty has become a defining issue of the decade.

If Vice-Admiral Eugene H. Black III, commander of the US 6th fleet, were to make a request of the Prime Minister and referred to the positions that his fleet had taken up in the Channel, most people in Britain would object to this interpretation of the special relationship. 

However, when Mike Pompeo, US Secretary of State requested that the Prime Minister stop using Huawei 5G products implying that the US would stop sharing intelligence with the UK and referring to the fact that the US controls the payment infrastructure of the city of London, and US software is needed for all UK electronic chips etc., there was no public objection despite the fact that the thorough security analysis by GCHQ, had concluded that it was safe to use Huawei products in non-critical parts of the 5G infrastructure.  The coercion was equally blatant, but technological might is less visible to the public than a US Aircraft Carrier in the Thames Estuary.

In the past Britain’s dependencies on other nations were overlooked because it was believed that supply chains were secure, and the US was considered a dependable ally. Both these assumptions are now in question. 

Henceforth every nation or group of nations has to ask three questions:-

  • Do we have the critical technologies ourselves?
  • If not, do we have access to these technologies from a number of independent countries?
  • If still not, do we have guaranteed, unfettered, long term (>5years) access from monopoly or oligopoly suppliers of a single country (typically the US or China)?

If the answer to all three questions is no, we lay ourselves open to technological coercion that is no less severe than the military coercion of yesteryear.  

Does Britain have all the critical technologies needed for her economy and government to function properly? To take just 5G, payment systems and semiconductors as examples, the answer is clearly no.

Can Britain get guaranteed unfettered long-term access to these technologies? In trade negotiations the outcome is determined by the relative heft of the participants. 

Britain has one per cent of the world‘s population, two per cent of the world‘s GDP (PPP) and a cupboard of globally dominant technologies that is almost bare with one of its trophies, ARM, under offer. 

Despite Brexit, the only rational option for Britain to achieve Technology Sovereignty is through collaboration with the world’s third economic superpower, Europe. 

But Europe is in danger of becoming collateral damage in this US-China trade war. Trump’s short-sighted, aggressive overreach in using US dominance in semiconductors to cripple Huawei has alarmed the Chinese Government.
It became a Sputnik moment for China which responded by starting a national effort to become independent in semiconductors using massive D
State funding. 

China can and is outspending the US, and is deploying many times the number of highly trained engineers in the semiconductor sector. There is no doubt that China will rapidly reverse the dependence relationship with the US in semiconductors. Trump will have won a battle and lost the war as China comes to dominate the semiconductor industry. 

The rational alternative to these myopic strategies is the exact opposite to America First: We should help China develop its semiconductor industry based on the principle of reciprocity. 

In exchange for IP and technical support China shall build factories in Europe to serve European markets and share the jointly developed IP. This strategy worked well with the Japanese car industry.

Britain’s Government must soon decide whether to stop the NVIDIA takeover of Arm, whose microprocessors are ubiquitous. They are in most cars, IT infrastructure equipment, 95 per cent of mobile phones etc. 

NVIDIA’s purchase of Arm would create yet another giant US monopoly, adding to the number of US dependencies and powers of coercion, and deprive Britain of her one remaining bargaining chip in the upcoming struggle for Technology Sovereignty. It must be stopped.

Lastly, Europe together with Britain needs to create a €100 billion Technology Sovereignty Fund to counter the $100bn the US is spending on its Technology Sovereignty and the even larger amounts being spent by China. 

We should spend half of it to create alternatives to Chinese manufacturing monopolies and half to create alternatives to US IP, digital and payment monopolies. 

The only stable and equitable solution to the global Technology Sovereignty problem is for the US, China and Europe to be independently sovereign. They should help each other to achieve this based on the principle of reciprocity.

Dr Hermann Hauser is Co-founder and Venture Partner at Amadeus Capital Partners. He has founded or co-founded companies in a wide range of technology sectors including Acorn Computers (where he helped spin out ARM), Active Book Company, Virata, Net Products, NetChannel and Cambridge Network. He was a founder director of IQ (Bio), IXI Limited, Vocalis, SynGenix, Advanced Displays Limited, acquired by Cambridge Display Technology, Electronic Share Information Limited, E*Trade UK and has supported many other start-ups.

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