China practices economic statecraft, not a free market, meaning business deals often serve political ends. As the U.S. tightens controls on chips and other items it exports to China, Beijing is looking to Israel as an alternative tech source.
In March this year, the deal moved into the U.S. when the company signed a"strategic partnership" with Skorpios Technologies, a semiconductor company in Albuquerque, New Mexico, to jointly develop and manufacture ever-faster parts for customers, including in China. As it did not export dual-use technology—tech developed for civilian use that can also have military applications—the deal was legal, said David Huff, Skorpios' senior vice president for sales and marketing.
A draft National Critical Capabilities Defense Act would have the power to check and nix such"outbound investment" deals on security grounds. It has bipartisan and White House support but faces opposition from influential figures including Senator Patrick J. Toomey, a Republican from Pennsylvania, and John Murphy, a senior vice president of the U.S. Chamber of Commerce. They say it will hurt U.S. business.
Britain’s MI5 Director Ken McCallum and FBI Director Christopher Wray issued a joint warning last month about China seeking indirect ways to acquire valuable private sector intel.Wray drew attention to regional bureaus of China's Ministry of State Security, which he said"key in specifically on the innovation of certain Western companies...from Fortune 100s to start-ups, folks that focus on everything from aviation, to AI, to pharma.
For Orion, the defense strategist, there are other ways of handling things."We are not the U.S.," he said."Our legal system is different. We do counterterrorism differently. We fight our wars differently. We'll safeguard ourselves from China's challenges in our own way, while learning from others." Business is flourishing, Maor said: Sheng Enterprises has done $2 billion in deals in two decades. But he was aware of the risks and said he rejects proposals involving dual-use technologies.
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