MEA enterprise technology key battleground of US-China trade war, says GlobalData

03 Jul, 2024 MEA enterprise technology key battleground of US-China trade war, says GlobalData

Posted in Technology

Two developments in the Middle East and Africa (MEA) region have become signposts of a struggle between America and China involving enterprise technology: Huawei has become the first cloud vendor to create a cloud region in North Africa, and the UAE-based AI group G42 has enabled a $1.5 billion deal with Microsoft by replacing Chinese technology for American hardware. Against this backdrop, the MEA region is emerging as a battleground for international tech supremacy in all areas related to enterprise technology, like cloud, radio access networks for enterprise 5G, and artificial intelligence (AI), says GlobalData, a leading data and analytics company

Ismail Patel, Enterprise Technology Analyst at GlobalData, comments: "Chinese vendors, principally Huawei, are moving in to woo telcos and governments with the promise of improved infrastructure and an immediate boost to national economies, all of which dovetails with the digitalization of economies and the fulfillment of national visions. Offsetting this, the threat of US sanctions is delaying many countries from putting all their eggs in the Chinese basket."

A microcosm of this battle can be seen in the Arabic LLMs that are now being developed to serve generative AI. The two most prominent are by Huawei and UAE's AI group G42. Huawei's Arabic LLM is based on 100 billion parameters, surpassing Emirati G42's Microsoft Azure-based Arabic LLM dubbed 'Jais,' which is a 13 billion parameter model.

Another area of interest is open RAN, of which Huawei is not a member. Operators in markets like the UAE and Saudi Arabia are embracing the interoperability of O-RAN, but telcos in many other MEA markets are selecting Huawei's equipment to save themselves from the cost of managing composite networks.

Patel adds: "Many operators and governments in MEA will continue to straddle the fine line between embracing capital-efficient Chinese technologies and locking themselves to them. Another consideration is the geopolitical backdrop concerning which of the two trade superpowers to align with. Answers will inevitably vary depending on whether the entity is a government, a large corporation, or an SME, as well as the immediate needs of the economy and business."

What is clear is that Huawei is bullish about its prospects in the region, where it is also investing to the tune of hundreds of millions of dollars in programs across MEA, especially in Africa, where it is investing $300 million in Egypt alone to support cloud services, develop an ecosystem software and channel partners, and train developers and technology professionals.

On the other hand, America is adopting a defensive carrot-and-stick approach: carrots for key stakeholders in first-tier regional markets like the Gulf States by incentivizing them to replace and divest themselves from Chinese equipment so they do not fall into China's orbit.

Patel concludes: "But whether or not the stick of US sanctions will be sustainable in the long term as a tool to counter the influence of Huawei and China is a question that is too complex for now. Also, it is contingent on a variety of factors such as geopolitics, the cost of Western equipment and technologies, the emergence of future cost-saving technologies (like network slicing, 6G, quantum communication, and enhanced edge computing), and most importantly, demonstrable success stories that can be replicated from first-tier to second-tier markets."