President Biden’s State of the Union address last week may distract the U.S. media. News outlets may want to cover the intensifying trade war between the U.S. and China. The worse it gets, the more the two superpowers will suffer economically.
On March 8, Bloomberg broke the news that Huawei Technologies and Semiconductor Manufacturing International relied on U.S. technology to make its advanced chip in China last year. The Chinese chip firm used hardware made by both Applied Materials (AMAT) and Lam Research (LRCX). As a result, it could make a 7-nanometer chip for Huawei.
Last year, Huawei unexpectedly announced the launch of an advanced Mate 60 Pro.
Huawei needed ASML’s technology to manufacture the powerful chip.
In Feb., the SEC issued a subpoena to Applied Materials as it investigated shipments to China. Still, AMAT stock never fell below the $200 level since then.
Google AI Secrets Stolen
News that Google was a victim of trade secrets will only hurt U.S. and China relations. On March 6, a federal grand jury indicted Linwei Ding on four counts of theft of Google’s trade secrets. Ding uploaded over 500 confidential Google files between May 2022 and May 2023.
Your Takeaway
Expect American tech firms to tighten their security to protect their IP. It will weaken the attractiveness of buying China tech stocks based on their deep value. Firms like Baidu (BIDU), Alibaba (BABA), JD.com (JD), and Tencent (TCEHY) are risky value traps at this time.
