Chinese bid for US chipmaker could raise cybersecurity fears

Chinese bid for US chipmaker could raise cybersecurity fears
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A $23 billion Chinese bid to purchase a U.S.-based microchip company could test the two countries’ tense cybersecurity relationship.

The Wall Street Journal reported Tuesday that the state-owned Chinese chipmaker Tsinghua Unigroup is going after U.S. memory chipmaker Micron Technology. If the deal goes through, it would be the largest ever Chinese purchase of a U.S. firm.

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Beijing wants to buy Micron to boost the quality of its own domestic information technology. Memory chips are crucial in developing better smartphones and defense technology.

Chinese officials have been transparent about their desire to reduce reliance on foreign information technology, partly in order to exercise greater control over data within the country.

Over the objections of international governments and businesses, China has continued to advance a cybersecurity law that would tighten the state’s control over digital data and give it power to review all network equipment, publishing a new draft of the proposed rules last week.

There are fears in the U.S. that China wants to use these rules to scoop up foreign companies’ source code, then use the technology for its own gain.

The apparent attempt to take over Micron Technology may exacerbate those fears.

The potential purchase will draw the scrutiny of the Committee on Foreign Investments in the United States, a group of officials from across the federal government.

The Treasury Department-chaired panel reviews foreign purchases to determine if they could pose a national security threat.

In the wake of allegations that Chinese hackers infiltrated the Office of Personnel Management, stealing over 22 million people’s sensitive data, officials are likely to keep a close eye on the deal.

“I think there is a reasonable probability there will be an issue with government approval given a deal of this size,” Handel Jones, president of the Silicon Valley consulting firm International Business Strategies, told the Journal.