Quantfury Gazette


When two tribes go to war


There is a simple truism to the playground — he who holds the ball, makes the rules.

It doesn’t matter if the person with the ball is big, strong or athletic. No, they are going to play and they are going to pick the teams and the rules. 

And, if they don’t like how things are going they can take away everyone else’s fun. There is even a saying for this: I’m going to take my ball and go home.

The ball is fundamental to the playing of the game. Without it, you’re just running around. So, if you own a ball, and you can prevent others from having one, that means that you will always have the power. 

This is a central tenant of not just the playground, but also in business and trade.

We can see this play out on the technology side, where companies that develop a process or device that gives them an advantage will protect it from being copied by their competition at all costs. To a certain extent that’s just capitalism, but taken to its natural, extreme conclusion it could end up hurting everyone, which is why most Western countries have laws that prevent monopoly situations from arising. 

In today’s New York Times, there is a great article detailing one such example of protectionism that arguably has gone too far. It relates to semiconductor technology and a Dutch company called ASML Holdings (AMS: AMSL). 

The article details the technology much better than I can in this space, but the tl;dr is that they have developed a computer chip that is just faster and better than anything else that is available. That’s massive in the manufacturing world, as it will allow companies that have the chip to make things faster and better. 

That’s a good thing. Less good, it can be argued, is that the US has pressured the company to not deliver the tech to China. Having bought the ball, the Americans don’t want China to have one either. That’s a political choice that is underlining how fragile the global supply chain can be.

Since this chip is game changing, the Chinese are going to have to develop one of their own now. They will, but it will cost time and money and that, in turn, will be reflected in increased cost for items produced in China — and that’s a lot of things that are key to the manufacturing of a lot of other things. 

In the short term, the US might look at this as a political gain (and, to be clear, protectionism from Chinese manufacturers is a bipartisan concern in Washington), but if you look at it from a global perspective it’s hard to see it as a win. 

The more people that own a ball, the more likely it is that everyone will get to play in a game that benefits them, right? 

I don’t know what the answer to this is and I’m not getting into the U.S. political side of the debate, but I will suggest that this fight is a great example of the challenges that the global supply chain is facing right now.  

And, that’s an issue that should be of interest to anyone that is interested in business and investing.            


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