Silicon Valley's Loss Will Be China's Gain

This is where the trade war meets the tech war.

- Catherine Thorbecke

There are no winners from a prolonged trade war. But if this drags on, US President Donald Trump could see China's tech sector weather the blows much better than Silicon Valley.

While US companies are working to navigate the multilateral tariff battle instigated by Washington, Beijing will no doubt seize the opportunity to gain an edge in key technologies such as artificial intelligence, and end up setting global standards for its use.

Global tech stocks on both sides of the Pacific have taken a beating since last week's "Liberation Day" blitz and China's response of 34 per cent reciprocal duties. As Mr. Trump threatened further retaliation, China has vowed to "fight to the end." The uncertainty is hard on both investors and business leaders, and has already inflicted lasting damage to industry ambitions.

But if you compare the risks to America's most valuable tech company, the uniquely vulnerable Apple Inc, with China's Tencent Holdings, there is a stark division of fate. The Chinese titan's stock has been dragged down by the markets, but its domestic focus largely insulates it from the worst of the trade disruptions.

The earnings outlook for Tencent, and its internet peers in China, remains largely unchanged, Bloomberg Intelligence analysts said. Investors, meanwhile, have been rushing to do rough calculations on the damage this could inflict on Apple's earnings outlook, while the variables seem to change every day.