The Chinese Are Buying-Up ‘The Crown Jewels’ Of U.S. Technology

National flags of U.S. and China wave in front of an international hotel in Beijing February 4, 2010. REUTERS/Jason Lee

Politico: How China acquires ‘the crown jewels’ of U.S. technology

The U.S. fails to adequately police foreign deals for next-generation software that powers the military and American economic strength.

The U.S. government was well aware of China’s aggressive strategy of leveraging private investors to buy up the latest American technology when, early last year, a company called Avatar Integrated Systems showed up at a bankruptcy court in Delaware hoping to buy the California chip-designer ATop Tech.

ATop’s product was potentially groundbreaking — an automated designer capable of making microchips that could power anything from smartphones to high-tech weapons systems. It’s the type of product that a U.S. government report had recently cited as “critical to defense systems and U.S. military strength.” And the source of the money behind the buyer, Avatar, was an eye-opener: Its board chairman and sole officer was a Chinese steel magnate whose Hong Kong-based company was a major shareholder.

Despite those factors, the transaction went through without an assessment by the U.S. government committee that is charged with reviewing acquisitions of sensitive technology by foreign interests.

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WNU Editor: My brother works in the biotech field in the Bay Area and has been involved in a number of start-ups over the years. He tells me that Chinese venture capital is all over the place, and they are investing heavy.