Chinese monopoly on computer and phone manufacturing poses a risk to tech stocks

This week saw major exposés from the shadowy world of espionage. Much of the news has focused on details of the Russian operation to poison former agent Sergei Skripal with a deadly nerve agent, this spy novel type attack has overshadowed the far more serious cyber security threats that were also disclosed. The most disturbing is the news that Chinese intelligence agencies infiltrated several factories making computer components and managed to install chips on motherboards that ended up in secure servers that were installed in US Navy warships, the CIA, the Department of Defence and a number of other sensitive government agencies as well as in corporations such as Apple and Amazon.

That 90 per cent of PCs and 70 per cent of all mobiles phones are ultimately made in China shows how vulnerable the global supply chain is to an attack of this nature. While the hack is certainly audacious, it is unlikely to be unique. Silicon Valley has long been accused of cooperating with US intelligence agencies. Tech stocks sold off heavily on the revelations, but they will no doubt soon be forgotten. The risks these stories highlight should not be.

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