Could the U.S. Lose Cloud Computing to China? Edit My Quotes
The pandemic saw many companies, particularly digitally based ones, profiting as millions of people globally shifted to working from home. China’s Huawei, a leader in information and communications technology infrastructure as well as smart devices, doubled its global market share for Infrastructure as a Service in 2020, according to Politico.
Cloud computing has become a vital part of a digital age, as it houses everything from databases and storage, to email, to artificial intelligence, which include data applications that require an enormous amount of computing power that the cloud can provide.
It’s an area that could go the way of 5G if the U.S. isn’t careful; while Microsoft, Amazon, and Google were all first into the space, China is creeping into market share by passing policies that promote its own providers.
China blocks foreign providers from competing within China, allowing Chinese companies to dominate the industries of a rapidly growing economic powerhouse. China is currently home to the second-largest cloud services market. In addition, China has passed policies that favor the development and growth of cloud services, providing $1.4 trillion to digital infrastructure in the Five-Year Plan.
It’s a strategy that worked previously to propel Huawei into the dominant spot as a global telecom equipment provider and leverage the global market on 5G.
Huawei is currently in partnerships with Mexico and Brazil, providing federal data centers for each country, as well as investing in Argentina and Chile. This is in a bid “to form a giant triangle of improved coverage and better connectivity in Latin America,” said Huawei regional president Xiao Fei.
While the U.S. has a stronger stance in the cloud computing industry as a first mover, it continues to take a backseat in the global arena as more and more emerging countries are looking to strike digital trade deals, something that Huawei continues to capitalize on.
Cloud Computing in a Digital Age
Cloud computing continues to profit and have exponential growth opportunities as the world moves increasingly more digital. The WisdomTree Cloud Computing Fund (WCLD) provides investors pure-play exposure to companies that provide cloud-based software, such as popular company Crowdstrike Holdings.
WCLD tracks the BVP Nasdaq Emerging Cloud Index, an equally-weighted index comprised of companies that derive the majority of their revenue from software provided via the cloud. That could mean remote delivery, or a cloud-based business model that is subscription-, transaction-, or volume-based.
WCLD offers multi-cap exposure to emerging, fast-growing companies within cloud software and services. Holdings include Mimecast Ltd (MIME) at 1.98%, Crowdstrike Holdings Inc at 1.94%, and Okta Inc at 1.89%.
WCLD has an expense ratio of 0.45%.
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Read more on ETFtrends.com.The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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