-Caveat Lector-
What We Fail to Grasp:
The U.S. Shouldn't Lose Control of This Spying Technology
By Alan Tonelson
Sunday, January 7, 2001
Page B05
When Dick Cheney and Colin Powell were overseeing U.S. military
operations during the Persian Gulf War in 1990-91, much of their
intelligence data on Saddam Hussein's forces was the result of
technology that came from Tinsley Laboratories of Richmond,
Calif. Tinsley has been the sole manufacturer of many of the
state-of-the-art mirrors and lenses in the high-powered cameras
carried by America's spy satellites -- systems that the Clinton
administration has called "among the most valuable U.S.
national security assets."
The U.S. government has long sought to restrict foreign access
to this technology. But that's about to change. As Cheney,
Powell and the rest of the Bush team prepare to take office,
Tinsley's parent company, Silicon Valley Group Inc., is scheduled
to pass into foreign hands. Unless the Clinton administration
acts by Friday, its legal authority to hold up the proposed sale
will expire, and the U.S. manufacturer will become part of a
Dutch company, ASM Lithography.
Since ASM announced its acquisition of SVG/Tinsley in October,
President Clinton's leading national security advisers have not
shown much interest in closely reviewing the acquisition. Some
career government officials are saying privately that their
superiors do not seem adequately focused on determining whether
foreign ownership of SVG/Tinsley will damage U.S. security
interests.
Last week, the issue got the attention of Sen. Robert F.
Bennett (R-Utah). He asked Treasury Secretary Lawrence H.
Summers -- whose department heads an interagency committee
charged with evaluating the impact of such takeovers on national
security -- to authorize a full investigation of the acquisition.
Ordering such an investigation would have the effect of delaying
the sale for at least 45 days -- enough time for the new
administration to block the deal if such a step proves necessary.
It will also give President-elect Bush a chance to show that he
is serious about rebuilding the U.S. military and maintaining
control over its high-tech foundations.
The Treasury-headed interagency group -- known as the Committee
on Foreign Investment in the United States (CFIUS) -- began a
routine review of the SVG/Tinsley acquisition on Dec. 13.
Since the committee was created in 1988, it has reviewed some
1,400 proposed deals. During the Clinton years, however, the
panel has never blocked a deal (only one was nixed during the
elder Bush's administration) and has conducted only about a dozen
full-scale investigations of the kind sought by Bennett.
Although the Netherlands plainly deserves its reputation as a
loyal NATO ally, some U.S. defense and intelligence officials
worry that ASM's far-flung global operations and corporate
alliances with companies like Germany's Carl Zeiss and Schott
Glass could make it more difficult to keep SVG/Tinsley's advanced
optics and lithography capabilities from migrating to unfriendly
countries. The sale also raises other policy questions --
mainly, should an American company be sold to foreign entities
for private gain when it has benefited from U.S. government
contracts and assistance totaling hundreds of millions of
dollars?
Since 1997, Tinsley has been owned by SVG, one of the world's
leading producers of the manufacturing equipment that helps build
semiconductors, the silicon chips integral to computers and other
electronic equipment. Tinsley's strength in producing advanced
optics made its acquisition by SVG a natural; the most critical
phase of chip making (called lithography) involves using
microscopic beams of light to etch equally microscopic circuit
patterns onto silicon wafers. SVG/Tinsley is understandably a
tempting takeover target for ASM, a lithography giant that lacks
such leading-edge technologies.
SVG/Tinsley's technologies are found throughout the U.S.
military's highest tech systems, and are crucial to the
Pentagon's future plans. In addition to strengthening the U.S.
reconnaissance network, the company's optics are used in the
lasers in missile defense systems being developed by the U.S.
government's nuclear weapons labs at Livermore, Calif., and
Sandia, N.M. Tinsley also engineered the optics package that put
NASA's malfunctioning Hubble space telescope back in business.
Moreover, SVG/Tinsley's capabilities are at the heart of a
government-business partnership to create the next generation of
lithography technology, a breakthrough urgently needed because
current chip-making machines are nearing the physical limits of
their ability to place more computing power onto each chip.
Without access to the best possible semiconductor manufacturing
equipment, the U.S. military may not enjoy exclusive access to
the world's most advanced computer chips.
Save for one small niche supplier, Ultratech Stepper in San Jose,
Calif., SVG is the last remaining American-owned lithography
company. Indeed, in 1996, the Clinton administration helped the
company avoid a takeover by Canon, the Japanese electronics and
lithography giant.
Sounding the alarm about the Dutch buying up American high-tech
companies seems almost comical. But as the U.S. government has
learned in recent decades, Japan and some of our NATO allies seem
to underestimate or overlook the dangers of selling technology to
nations that are often hostile to Western interests, such as
Libya, Iraq, Iran and North Korea. ASM, for example, works
closely with Taiwanese semiconductor manufacturers, who are
sending increasingly advanced production capability to China.
In addition, the company procures major components for its
lithography machines from optics maker Carl Zeiss, which has
offices and outlets in Libya, Syria, China and India -- whose
nuclear weapons programs have so troubled Washington.
Of course, American-owned companies can neglect national security
concerns, too -- just consider defense contractor Lockheed, which
was fined $13 million last year for aiding China's satellite
program. And many U.S. high-tech manufacturers share technology
with Taiwanese partners as well. But unlike their foreign
counterparts, American-owned firms are at least subject to U.S.
export control laws. These laws govern ASM's activities in the
United States, including its participation in the next-generation
lithography project at the nuclear weapons labs. But American
regulation will be practically irrelevant if ASM moves
SVG/Tinsley facilities overseas -- as it would be free to do --
or claims that new products are based on breakthroughs made by,
say, partner Zeiss in one of its foreign facilities.
It is important to note that both SVG and Tinsley owe much of
their prowess to U.S. government support. Since 1987,
Washington has spent more than $1 billion to ensure the survival
of a world-class U.S.-owned and U.S.-based lithography industry.
Government technology officials estimate that SVG and Tinsley
have received tens of millions of dollars in taxpayer funds, and
SVG's current superiority in lithography and advanced optics
stems in part from its use of special testing equipment developed
at the Livermore National Lab. SVG also has been able to
spearhead the new lithography equipment effort partly because its
membership in the next-generation partnership has given it access
to the innovative know-how and superior technology of the U.S.
national labs.
Past foreign takeovers of U.S. technology stars have sometimes
been approved because the American firm was weak financially.
But SVG is a healthy company, with earnings of $46.8 million in
fiscal 2000, and sales that rose 78 percent, to $842.3 million.
President-elect Bush and his advisers speak more often than did
their predecessors of the need to balance America's interests in
open markets and free trade with national security concerns.
Reviewing the SVG sale with a fine-toothed comb is the right
place to start, and President Clinton's team should give them the
opportunity. Alan Tonelson is a research fellow with the U.S.
Business and Industry Council Educational Foundation, a
business-affiliated research group. His book on globalization,
"The Race to the Bottom" (Westview Press), was published in the
fall.
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Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT
FROM THE DESK OF:
*Michael Spitzer* <[EMAIL PROTECTED]>
~~~~~~~~~~~~~~~
The Best Way To Destroy Enemies Is To Change Them To Friends
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