A second round of proposed tariffs on Chinese goods would likely take greater steps to protect American intellectual property, according to several analysts.

“While the focus today is trade, the real agenda is to protect U.S. [intellectual property],” Pitzer wrote, noting that current litigation playing out in China could further inflame U.S.-China tensions over IP.

A White House spokesman in March announced the intention to assign tariffs explicitly in response to “China’s state-led, market-distorting efforts to force, pressure, and steal U.S. technologies and intellectual property.”

But the first round of proposed tariffs don’t yet achieve that goal, Ives said, suggesting looming risk for tech companies.

Future American laws limiting information sharing with China could clamp down on the U.S. technology sector, said John Vinh, equity research analyst at KeyBanc Capital Markets.

That could limit the spread of 5G internet connectivity, which has been led by American companies like Qualcomm and Texas Instruments. Cloud computing and machine learning could also be vulnerable to regulation, even as they face growing Chinese competition from Alibaba, Baidu, Tencent and Huawei, Vinh said.

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“[I]t’s at least possible that the U.S. could restrict the sale of semiconductors targeted toward key technologies, such as 5G or artificial intelligence, where Chinese [manufacturers] such as Huawei and ZTE undoubtedly wish to participate,” Caso wrote.

“[I]t would be impossible to put such restrictions in place without far-reaching collateral damage. … [Chips] used in products across dozens of other sectors …. could come to a halt if export restrictions were put in place.”

Disclosure: KeyBanc Capital Markets expects to receive or intends to seek compensation for investment banking services for Qualcomm-affiliated NXP Semiconductors and Apple suppliers Qorvo and Skyworks. It also makes a market in those securities.



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