Yesterday we talked about a Chinese firm's bid for Micron. We've read further on the subject and have concluded that this is not a serious offer but a trial balloon. For one thing, it is much too low, and if the rules of the acquisition game demand a starting low bid, this one is foolish.
Then what does China have in mind? Here's one guess: It's the opening salvo in an attempt to wrest semiconductor technology from the U.S. A lot of this technology is now in Asia, but not enough to tilt the scales. Take semiconductor equipment. Applied Materials is king of the hill, and its attempt to merge with Tokyo Electron was scotched last year because of likely hostility from the U.S. government (on antitrust, not security grounds). Then there's KLA and Teradyne and several other medium-sized companies that possess critical technology.
Let's suppose China made overtures to several of these companies. Then the U.S. would be left with a conundrum: Do we stiff them all, declaring economic warfare on China and inviting retaliation? Or do we succumb meekly? Globalism is a game we're not good at, despite President Obama's efforts in Cuba and Iran.
Watch the stocks of the U.S. semiconductor and equipment companies closely in coming weeks. And watch Advantest, a Japanese equipment company that has been beaten down lately, for signs of buying. If the Chinese are trying to corner the market in semiconductor technology, the equipment manufacturers' stocks are where their fingerprints should be visible.
Of course, the folks in Washington may prefer economic warfare to diplomacy. As the presidential campaign heats up, expect a bitter battle between the hawks and doves. It should make interesting reading - if it weren't so doggone serious.