US-China, chip shortage, hybrid work

The United States and China should find ways to work together as it will serve the two countries well, said Chuck Robbins, Cisco executive director.

President Joe Biden’s administration is likely to seek more contact with Beijing than the previous administration through intense discussions of urgent issues, he told CNBC’s Squawk Box Asia on Tuesday.

“I think there will be attempts to find solutions, and I think the United States will also work very closely with our allies around the world,” said Robbins. “It is in the best interests of both China and the United States that these two countries actually find out how we coexist and how we work together effectively globally. I think this government recognizes that.”

Still, the management’s priority right now is to manage the Covid-19 pandemic and vaccination rollout efforts, the Cisco CEO said.

Chuck Robbins, CEO of Cisco Technologies Inc., speaks during a panel discussion at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, January 17, 2017. World leaders, influential executives, bankers and policymakers will attend the 47th annual meeting of the World Economic Forum in Davos from January 17th to 20th.

Jason Alden | Bloomberg | Getty Images

US and Chinese officials met in Alaska earlier this month – the first high-level meeting under the new administration got off to a rocky start. The meeting signaled that the Biden government has no plans to completely abandon the previous administration’s harsh tone in talks with Beijing.

The two countries see themselves as both economic rivals and competitors in developing advanced technologies in areas such as artificial intelligence and semiconductors. Some experts have said the rivalry can spill over into other areas such as green energy.

In January, Chinese antitrust authorities approved Cisco’s “strategic acquisition” of Acacia Communications worth $ 4.5 billion. The Chinese approval was reportedly the only hurdle in closing this deal, which was completed in early March.

Robbins said Cisco could close the deal in the event of the Acacia acquisition and hopes future deals will be “a little smoother” in terms of gaining regulatory approval.

Chip shortage is a problem

Cisco’s earnings report last month showed that its biggest business – infrastructure platforms, which include selling switches and routers for data center networks – is still struggling.

During the extensive interview with CNBC, Robbins also spoke of growing concerns about the global chip scarcity that hurts A range of industries, from automakers to game consoles like the PlayStation 5.

The shortage of chips started with a surge in demand for personal computers and other electronics as people worked and studied from home due to the pandemic. Many semiconductor companies only develop chips and outsource their production to other companies known as foundries.

According to Robbins, Cisco, which sells network chips, is doing everything it can to meet consumer demand. This includes buying ahead of time to keep the supply chain moving.

“It will certainly cause short-term pain for the next several quarters,” he said.

However, once there is some level of predictability in the market it becomes manageable, he added.

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