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Is a trade war brewing between China and US?

Posted: 06 Aug 2015 ?? ?Print Version ?Bookmark and Share

Keywords:acquisition? M&A? DRAM?

The worry about cybersecurity compromised through hardware is on centre stage right now in security circles. For example, in the continuing battle against counterfeit electronics in the military supply chain, a lurking issue has been that of sabotaged, and not just nonconforming, chips. More than one government official has remarked to this writer that a major federal concern was that of sabotaged chips swimming undetected in a sea of counterfeits. The fact that China is the source of roughly 70 per cent of counterfeit electronics by nearly every study does not assuage this concern.

It all adds up, I think, to a deal headed to the showers.

But my fear is that the semiconductor industry loses either way. China is acting in its own national interests. It has recently imposed even more draconian demands on foreign tech companies operating in China. A Micron deal quashed by Washington could elicit further such steps by the Chinese.


Most fundamentally: China has failed to create its own semiconductor industry, spending more on imported chips than on oil. Advantage to the untenable status quo from the Chinese point of view.

All this is no doubt what Credit Suisse means by a "brewing trade war."

Let's face it: a takeover of Micron by a quasi-state-owned Chinese firm is more than a little scary. But the alternative can give us no comfort.

- Mitchell Miller

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