US bid to block Chinese global tech deals a 'red flag': State media

SHANGHAI • State-backed Chinese tabloid the Global Times called the United States' efforts to block cross-border acquisitions of technology companies a "red flag" that impedes China's tech sector and disrupts the growth of the global sector.

The media outlet, published by the People's Daily, China's official newspaper for the ruling Communist Party, argued that a recent attempt to block a Chinese purchase of a South Korean chip company "represents a dangerous precedent for the industry as a whole".

"If the US succeeds in blocking the deal this time, it could set a very bad precedent for global high-tech mergers and acquisitions, further consolidating the industrial concentration in the US," the op-ed read.

In March, China-based private equity group Wise Road Capital announced it would purchase South Korea's Magnachip Semiconductor for US$1.4 billion (S$1.9 billion). On Monday, Magnachip said in a Securities and Exchange Commission filing that the US Treasury, in a letter to the company's legal counsel last Friday, said the acquisition posed "risks to the national security" of the US.

The chip sector has become a hotbed for US-China tension. Both countries are pouring billions into their domestic industries, recognising that semiconductors are critical to national security and economic development.

Cross-border acquisitions, which require approval from regulatory bodies, have at times fallen apart because of government objections. In 2018, Broadcom, which was then based in Singapore, withdrew its US$117 billion bid to acquire Qualcomm after Washington's Committee on Foreign Investment in the United States said the purchase could endanger the US' national security by aiding China.

Separately, the Global Times said yesterday that Canadian businessman Michael Spavor, who was convicted of espionage last month, provided photographs of military equipment to fellow Canadian Michael Kovrig, who is also detained in China.

The newspaper, citing an unidentified source, said the photos and images Spavor took of the equipment were state secrets and he also provided the photos to people outside China.

Spavor was a "key informant" for Kovrig, the newspaper said.

China arrested both men in December 2018, soon after Canadian police detained Chinese tech giant Huawei's chief financial officer Meng Wanzhou on a US warrant, charging her with sanctions-related fraud.

China, which rejects the accusation that the cases of the two Canadians are linked to Meng's, has released few details on either case.

In Canada, a judge is due to rule on Meng's case on Oct 21.

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 03, 2021, with the headline 'US bid to block Chinese global tech deals a 'red flag': State media'. Subscribe