New York Times/ Bloomberg Interviews: US-China Tech Cold War

BBAs China Takes Aim, Silicon Valley Braces for Pain –

The New York Times

SAN FRANCISCO — When Silicon Valley looks west to China, it sees many things. More than a billion hungry consumers. A cheap source of labor. A competitor, partner, supplier and security risk.

Now add this: A foe bent on retaliation.

The Chinese government said Friday that it was putting together an “unreliable entities list,” a counterattack against the United States for denying important technology to Chinese companies. No companies were named or details given, but tech firms seemed all but assured of being a prime target.

As the economic relationship between the two countries frays at warp speed, the much-anticipated tech cold war is escalating.

“If China continues to push back, and we continue to push back, there will soon be dual technology standards,” said Rebecca Fannin, author of the coming book “Tech Titans of China.” “Prices will probably rise for components, which companies will pass along to consumers. But both sides will strengthen their innovation edge, and that helps the global economy.”

Some Silicon Valley companies are more vulnerable than others. Because Facebook and Google are blocked by the Chinese government, social media and search might be kept out of the conflict. Apple, on the other hand, is heavily invested in China, which is both a major manufacturer of the iPhone and a major market for it.

Tesla is building a plant in Shanghai that will produce 250,000 cars a year. Venture capitalists have poured in funding. Microsoft’s research lab in Beijing is its largest outside the United States, while many of the products in the Amazon shopping mall are made in the country. Amazon also just opened an A.I. lab in China.

The consequences of the deteriorating relationship are already playing out with smaller tech companies.

with Emily Chang
May 31, 2019