HALF MOON BAY, Calif.--U.S. Fiscal cliff and debt ceiling; Europe's
economy; Middle Eastern winters or springs. These crises of the
moment are all well and good and keep us in racy headlines and
talk-show chatter, but where the rubber meets the road is in Asia.
And in the coming years, this region--so crucial to design- and
supply-chain health of the electronics industry--is heading toward a
cold war, according to Matt Gerken, a geopolitical analyst
and Ph.D candidate at the University of Texas.
"I don't think this is an overstatement," Gertken told an audience
of industry executives here Monday (Jan. 14) at the annual
Industry Strategy Symposium produced by the semiconductor production equipment trade group SEMI. "The Asian powder keg situation is not
getting ample attention." (See related story:
Electronics growth threatened by fiscal uncertainty, higher taxes).
The rise of China as a regional economic and military power is one
trigger, and this is causing strange new effects and bedfellows,
unimaginable just a few years ago, Gertken said.
"If you're Vietnamese, your grandfather was probably killed by an
American. Now Vietnamese people love Americans," he said.
"Philippines. Their grandfathers died at the hands of the Japanese.
Philippines and Japan and now having negotiations to sell each other
weapons, talking about defending against China. These are huge
changes in my opinion."
There are indications, Gertken said, that Japan is about to very
quickly alter course. Re-militarization is picking up steam, and recent elections perhaps foreshadow
more realistic fiscal and monetary policy.
"In Japan, we have reason to think that the geopolitical situation
has bottomed out," he said.
In addition, Japan's proven that it--like the United States--shifts
from long periods of introversion to periods of extroversion, and it
does so quickly.
"When Japan changes its mind, it moves very quickly," Gertken said,
recalling the Meiji Restoration in which Japan went from feudal to
modern society in a matter of years and "by 1905 had destroyed the
In China, a leadership change suggests continued focus and reform in
the short term beneficial to business, but longer term Gertken said
he sees a re-emergence of Communist party rhetoric in national affairs.
The new leadership group isn't composed of businessman or
soliders, Gertken said, adding "in other words, you're looking at
the rise in ideology in Communist Party orthodoxy."
"The real shift that's going on now in the medium to long term is
toward the Communist Youth League 's version of maintaining social
stability by redistributing wealth, not in reforming the
corporate sector," Gertken said, adding that means shifting economic
gains from the booming coastal areas of the country to pay for
infrastructure improvements in China's poorer interior.
Gertken offered no direct warnings about the potential impact of
the evolving Asian geopolitical situation, although he did say
tensions--if they spiral out of control--could lead to maritime
disruption at some point, which likely would disrupt the electronics supply chain to some degree.
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