Thread by @AnaSwanson

Trump’s trade deal secured gains for tech firms operating in China. But the end result of the two-year conflagration may end up being more damaging for them

nytimes.com/2020/01/20/bus…

@ceciliakang and I look at the case of Micron, an Idaho chipmaker at the heart of the trade war

@ceciliakang Micron rebuffed a takeover by a Chinese state-owned company, only to have its designs stolen and replicated and its business blocked from China. The Trump administration saw it as a “camera ready case” and met the company repeatedly as they designed their trade offensive on China

@ceciliakang “We are seeking justice,” President Trump said in a speech last September in which he mentioned Micron. “For years, these abuses were tolerated, ignored or even encouraged… But as far as America is concerned, those days are over.”

@ceciliakang The China trade deal contains some important gains for companies like Micron — better trade secret protection and unprecedented commitments not to force technology transfer (in addition to market opening for ag and financial firms)

@ceciliakang But the deal doesn’t address bigger economic problems that the industry says put US technology at risk, like China's use of subsidies, state-owned enterprises and and industrial plans to try to jump ahead in chip manufacturing

@ceciliakang Meanwhile, the trade war and other new tech restrictions appear to be speeding up a bigger process of tech decoupling. US suppliers say their customers view them as unreliable. China is switching to buying products elsewhere, and accelerating its own push for self-sufficiency

@ceciliakang “Let’s be clear, the trade war has been very bad for the semiconductor industry in several ways,” said @RobAtkinsonITIF “It’s like China woke up and said, ‘We’ve relied too much on the United States.’"

@ceciliakang @RobAtkinsonITIF Mr. Trump’s supporters say that conflict is inevitable — that the U.S. cannot wait any longer to take on competition from China, and allowing China to gain an advantage in chips would give them a commercial and military edge. The situation will only get worse as time goes on

@ceciliakang @RobAtkinsonITIF But there are big questions about whether these policies are working. Chipmakers are global companies that are beholden to their shareholders and not willing to give up the China market, the center of global electronics manufacturing and a growth market for decades to come

@ceciliakang @RobAtkinsonITIF Many experts told me that new U.S. policies are encouraging technology companies to invest outside of the United States to secure access to China.

“You’ve got to be there, no matter what the president says,” says Jim McGregor, Greater China Chairman for APCO Worldwide.