Tech Nationalism is driving China’s near-term goals. Can the U.S. compete and what do startups need to know about this tech tug-o-war?

Ray Zinn is back with another informative episode of the Tough Things First podcast.

Rob Artigo: I’m Rob Artigo your guest host for this edition of the Tough Things First podcast with Ray Zinn, the longest serving CEO in Silicon Valley. Hello again, Ray.

Ray Zinn: Hi, Rob. So good to have you with me today.

Rob Artigo: I appreciate it too. With China driving toward tech independence in the U.S. wanting to bring businesses back to the country, I read for the first time this term tech nationalism. I suppose you’ve heard the term tech nationalism. I know that you mentioned it on a previous podcast. What do you mean by tech nationalism? And do you think it’s a healthy thing for a country to pursue?

Ray Zinn: Absolutely. Your technology is like a patent. In other words, a country doesn’t patent it the company, the person who created the idea, patents it. And almost every country has some kind of patent regulations. So the technology that you have, whether it be antibiotics, medicine, medical equipment, semiconductors, electronics, some other form of copyrights, whatever it is, is nationalistic. In other words, it is a form of nationalism because that’s how you created who you are. And I think the United States has benefited tremendously from its technology. It’s probably the tech giant of the world. And so, if you want to protect your economic growth in your industry, you have to have some form of protection, whether it be tariffs or duties, or other laws and regulations, you have to do it.

Now, patents are only as good as the country is willing to honor those. For example, in China, they don’t honor patents like we do here. And so to them, it’s a matter of a way of life for them. They don’t care copyrights. They don’t care about patents. They don’t honor those laws. Then that emphasizes the need for nationalism or technology nationalism.

Now, I’m going to get off on a tirade here because I’m a semiconductor guy, born and raised with semiconductors, started back in 1963. And so this is an industry very near and dear to my heart. So semiconductors back when we started them, back in 1957, there was nobody really thought they were that wonderful. But now we have learned that all electronics, almost everything, anything that’s got any electronics in it has a semiconductor in it.

Well, owning and controlling the technology, semiconductor technology is key to our economic growth, because almost everything we do today is driven by some kind of electronic technology. And if semiconductors are the heart of that, that has to be protected. That’s what we refer to when we say tech nationalism, is how do you protect other countries from violating your technology or stealing your technology. And so that’s this whole thing that we’re fighting with now in China is that by 2025, China wants to source 90% of all their semiconductors in house. In other words, in China itself. Well, I mean, right now, they’re probably doing 40 to 50%, but they want to move that to 90. Now, that’s huge, if by the same token you have now, China’s moving from basically, they were 30% of the electronics in the world. If they move that to 90% electronics, you can imagine what that’s going to do to the U.S., and that’s happening.

I mean, that’s moving quickly to China now with Huawei and ZTE and others, large electronic companies in China, they really are trying to dominate the electronic industry, whether it be computing, telecom, whatever electronic industry that you can think of, they want dominated because they want to help out their country. They want their people to be employed. They want their people to become rich. And so that’s the way they have doing it is they’ll say, “Okay, we now have the technology, we don’t need the U.S.” And so, then he who dominates the semiconductor technology will dominate electronics. If you dominate electronics, you’ve lost your foothold as a world power.

Rob Artigo: Tech nationalism is what we’re talking about here and this matter of semiconductor is a remarkable example of this. Because it goes right to the core of everything. It might be the most glaring example out of all technology examples that how tech nationalism works, but I take it that the U.S. still tends to be the design leader for cutting edge semiconductors. But do the companies know that they are maybe perhaps losing out in this 2025 program, the China 2025 program?

Ray Zinn: Well, it’s like, they know they’re cutting their own throat, is that what you’re saying?

Rob Artigo: Yes.

Ray Zinn: Yes. They probably know they’re cutting their own throat, but they’re doing it with a very tiny razor blade. And so, they think, “Well, I’ll just bleed slowly. And so maybe I’ll be able to stem that bleed and still continue.” So they’re not thinking, I don’t think beyond 2025.

Rob Artigo: Death by 1,000 paper cuts.

Ray Zinn: Right, exactly. Or death by 1,000 bee stings. Okay.

So they figured that somehow or another, they’ll still survive, even though they know they’re being stunned to death or their death by 1,000 razor cuts. So it’s strictly, I think, a matter of them kind of putting their head in the sand and saying, “Well, I have enough blood that I can survive these 1,000 razor cuts.” But it’s foolish.

And the fact that we’re only talking another, what five years, four and a half years, if China is correct and they’re able to pull it off, you got Trump is pushing on vaccine, to do a world record time on that, well China’s trying to do the same thing with semiconductors and technology, as they’re also paying up the kazoo, wazoo, I guess, to get companies to buy that technology, to make sure they have it in place by 2025, because they’re bound and determined to meet that goal.

And so, if you’re saying, “Well, I’m going to die in three years,” then I guess you don’t care. But if you’re going to be around after 2025, I guarantee you, if China’s able to pull off what they said, you’re going to be hurting tremendously.

And I think the government is now realizing this. Whether it be vaccines, I mean, or antibiotics, or whether it be semiconductor technology, or other technology that is deemed important, like cell phones and communications, they’re waking up, with China coming out and saying, “We’re going to be self-sufficient by this timeframe,” has really awakened the sleeping giant. And so, there’s going to be, I think, a real push to protect this technology, which we referred as tech nationalism. So it’s coming. It’s going to happen or else this country is going to suffer tremendously. I can predict that.

Rob Artigo: Well, thank you for your time, Ray. You can find out more at the ToughThingsFirst.com website, Tough Things First on Facebook and the book’s Tough Things First and the Zen of Zinn. Make sure to take a moment and rate this podcast on your favorite podcasting platform. Thanks again, Ray.

Ray Zinn: Thank you, Rob.