>> AMERICANS WERE SHOCKED TO
FIND OUT A CHINESE SPY BALLOON,
CHINESE ESPIONAGE IS TARGETING
A WIDE RANGE OF OTHER SECTORS
TOO.
CONSTELLATION RESEARCH CHAIRMAN
AND PRINCIPAL ANALYST RAY WONG.
THANK YOU FOR COMING ON THE
SHOW.
>> THANKS FOR HAVING ME.
JACK OTTER: LET’S START WITH
TECH WHICH HAVE BEEN BIG RISKS
IF TENSIONS DID.
NONE MORE THAN APPLE, THAT
COMPANY SHIFTED A SMALL
FRACTION OF MANUFACTURING TO
INDIA AND VIETNAM BUT PLACES 3
MILLION WORKERS IN CHINA.
>> THERE’S A LOT OF RISK.
THE MARKET IN CHINA IS 20 TO
23% OF THEIR BUSINESS.
IT IS ALSO BUILDING HIGH SCALE
MANUFACTURING, ALL THE IPHONES
BEING PRODUCED AND IT IS ALSO
ABOUT THE TECHNOLOGY
INFRASTRUCTURE, THE ABILITY TO
MANUFACTURE CASES AND CHIPS AND
IPHONES AND OTHER GADGETS.
>> COULD THAT GO AWAY OR SLIP
AWAY OR -- WHAT WOULD HAPPEN IF
TENSIONS GOT WORSE?
>> I HAVE TO DIM -- GIVE TIM
COOK CREDIT.
HE SENT A GOOD JOB MANAGING THE
RELATIONSHIPS GIVEN THE
CONSTRAINTS HE HAS, BUT HE’S
LOOKING AT MAKING IPHONES IN
INDIA AND VIETNAM AND INDONESIA
AND THAILAND AND OTHER PLACES,
DECOUPLING THE SUPPLY-CHAIN IS
REAL AND THAT IS JUST
ELECTRONICS AND HIGH END
ELECTRONICS.
OTHER INDUSTRIES ARE DOING THAT
AS WELL BUT THEY DON’T DO IT
OVERNIGHT.
IT IS A 5 TO 10 YEAR
TRANSITION.
JACK OTTER: WE ARE RELIANT ON
CHINA FOR SEMI CONDUCTORS.
WHAT IS THE PATH TO
INDEPENDENCE, CAN WE OUTSOURCE,
THAT IS THE TAIWAN ISSUE.
>> A LOT OF ISSUES WITH
MANUFACTURING BUT YOU SEE THAT
WITH THE CHIPS ACT AND THAT
WILL TAKE 3 TO 5 YEARS. INTEL IS GOING BACK, ONCE
INTEL IS GOING BACK, ONCE
AGAIN, WE ARE AT RISK IN TERMS
OF CHIPS WE HAVE, COMPANIES
LIKE TESLA AND APPLE THAT ARE
IN CHINA, THEY TRY TO NAVIGATE
THAT BAD --
JACK OTTER: THIS IS A TECH WAR
WITH CHINA BUT GIVE US A SENSE,
WHERE IS CHINA HIT?
>> THERE’S A WAR ON ALL FRONTS
AND CERTAIN CATEGORIES, TAKE
THE ONES IN COMPUTING, SLIGHTLY
AHEAD OF THAT.
COMPANIES THAT ARE ABLE TO DO
THAT AND THIS NEW ERA OF
COMPUTING ALLOWS YOU TO
FORECAST THINGS IN A DIFFERENT
WAY.
ARTIFICIAL INTELLIGENCE, WE ARE
SLIGHTLY AHEAD BUT CHINA HAS
MORE DATA BECAUSE THE
GOVERNMENT CAN ACCESS DATA.
DATA PRIVACY IS A FOREIGN
CONCEPT, ALL THAT DATA BLOCKS
THE COUNTRY.
BIOTECH IS AN AREA WHERE WE
KIND OF HAD A LEAD BUT WE HAVE
RESTRICTIONS FOR MORAL OR
ETHICAL REASONS AROUND GENE
EDITING THAT GET IN THE WAY.
SAY THEY PROTECT US.
CLEAN TECH, AN INTERESTING ONE.
WE ARE AHEAD IN THAT AREA BUT
WHAT WE’VE DONE IS LOST POWER
SUPPLY CHAINS, RARE EARTH
METALS REQUIRED TO BUILD
BATTERIES, SOLAR PANELS MOSTLY
INVENTED IN GERMANY ENDED UP IN
CHINA FOR MANUFACTURING.
BY THE TIME IT BECOMES
MAINSTREAM IT WILL BE CHEAP FOR
CHINA TO DEPLOY IN THEIR OWN
COUNTRY.
AEROSPACE AND DEFENSE IS
ANOTHER AREA WHERE AIRPLANES
AND MANUFACTURING, WE HAVEN’T
PUT OUR SUPPLY CHAINS THERE BUT
EUROPEANS HAVE.
CHINA HAS THEIR OWN SEE 109 JET
THAT WILL BE POPPING UP IN
PRODUCTION AREAS.
JACK OTTER: IT WILL BE A LONG ROAD.
I WANT TO ASK ABOUT RECENT
NEWS, AND IT RAISES ISSUES.
IS IT SAFE TO PUT YOUR MONEY IN
THAT COUNTRY?
WHAT IS A GUY LIKE TIM COOK
THINKING WHEN SOMETHING LIKE
THAT HAPPENS?
>> THERE’S A LOT OF RISK.
TIM HAS BEEN DIPLOMATIC IN HIS
APPROACH TO DOING THAT.
IF YOU BECOME MORE FAMOUS THAN
XI XINPING OR PEOPLE IN THE
PARTY OR THE COUNTRY, YOU PUT
YOURSELF AT RISK.
IF YOU SPEAK OUT, YOU PUT
YOURSELF AT RISK.
YOU SAW WHEN TAIWAN ACTUALLY
SPILLED THEIR SEMICONDUCTOR,
COMPLEX MANUFACTURING IN CHINA.
EVERYONE THOUGHT IT WOULD BE A
GREAT RELATIONSHIP.
THE RESULT WAS PEOPLE’S PLANS
WERE TAKEN FROM THEM, GETTING
MONEY OUT OF CHINA.
BEN: CHRISTOPHER RAY, THE FBI
DIRECTOR, SAID CHINA AIMS TO
RANSACK THE INTELLECTUAL
PROPERTY, IS THAT OVERSTATING
OR DO YOU AGREE?
>> THE CHALLENGE IS OUR
TECHNOLOGY AND INTELLECTUAL
PROPERTY IS SO VALUABLE I AGREE
WITH THAT STATEMENT.
IT IS A CONCERTED EFFORT
TARGETING UNIVERSITY
PROFESSORS, TARGETING PEOPLE
THAT RETIRED FROM INDUSTRIES,
PROVIDING ACADEMIC MISSIONS,
THEY COME OVER AND SHARE THEIR
IDEAS AND COME TO IT, IT IS BY
THEFT AND BLACKMAIL.
YOUR COUSIN WORKS HERE AND
MAYBE HE CAN HELP US IF YOU
DON’T WANT TO SEE SOMETHING