On Sept. 14, the BBC reported that Chinese-backed Canyon Bridge Capital Partners was barred by the Trump administration from buying Lattice Semiconductor for $1.3 billion.
The big picture
President Trump’s move, as reported by the BBC, was out of concern for the potential transfer of intellectual property (IP) into Chinese hands. The acquisition of American semiconductor firms by Chinese-linked companies is an example of how China uses asymmetric hybrid warfare (AHW) against the United States.
To a U.S. firm, mergers and acquisitions are business as usual, but to the Chinese authorities, any firm on Chinese soil is an arm of the government and is therefore government property. President Obama once said in a speech, “If you’ve got a business, you didn’t build that. Somebody else made that happen.” The Chinese Communist Party (CCP) takes this quite literally. The rule of law doesn’t apply in China like how it would in Western countries, but many foreign firms naively believe it does, succumbing them to political forces they cannot fight. In the end, they lose hundreds of millions of dollars, lose a foothold in China, or at worst, become pawns of China’s war against the U.S.
The military and economic power of the U.S. is beyond the reach of China for at least several decades. Without the ability to acquire lP quickly through U.S. tech firms, China would never catch up to U.S. weapons development.
Part of China’s AHW strategy is to take over the semiconductor industry overtly while subversively creating backdoors into the tech they acquire. The Trump administration is taking these risks very seriously.
U.S. weaponry mainly relies on computer control and satellite positioning, so it’s no surprise that China is expending a lot of manpower and resources into hacking and acquiring IP from the tech industry. If China has the ability to hack high-tech weaponry, those weapons would be under the control of Chinese hands. Right now the U.S. is investigating to see if the two deadly navy ship collisions recently were the result of hacking. Whether or not these collisions were caused by the Chinese or not is unclear, but the CCP is definitely advancing in the cyber field.
SinoInsider has a 52-page report on China’s semiconductor industry that has been described as a “‘State of the Union’ for semiconductors” by elite financial professionals on Wall Street. Contact us for the full report.