SILICON VALLEY BRACES : 1/3

SMALLER companies are already feeling the pain of the tech war with Beijing.

When Silicon Valley looks west to China, it sees many things. More than a billion hungry consumers. A cheap source of labor. a competitor, partner and security risk.

Now add this : A foe bent on retaliation.

The Chinese government said Friday that it was putting together an ''unreliable entities list,'' a counterattack against the United States for denying important technology to Chinese companies. No companies were named or details given, but tech companies seemed all but assured of being a primary target.

As the economic relationship between the two countries, the much anticipated tech cold war is escalating.

''If China continues to push back, and we continue to push back, there will soon be dual technology standards,'' said Rebecca Fannin, author of the coming book. ''Tech Titans of China.''

''Prices will probably rise for components, which companies will pass along to consumers. But both sides will strengthen their innovation edge, and that helps the global economy.''

Some Silicon Valley companies more vulnerable than the others. Because Facebook and Google are blocked by the Chinese government, social media and search might be kept out of the conflict.

Apple on the other hand, is heavily invested in China, which is both a manufacturer of the iPhone and a major market for it.

Tesla is building a plant in Shanghai. that will produce 250,000 cars a year. Venture Capitalists have poured in funding.

Microsoft's research lab in Beijing is its largest outside the United States, while many of the products in the Amazon shopping mall are made in the country. Amazon also opened an artificial lab in China.

The consequences of the deteriorating relationship are already playing out with smaller tech companies.

Two weeks ago, the Trump administration put Huawei, the giant Chinese maker of  telecommunication gear, on an ''entity list'' that would  force it to get permission to buy technology from American companies.

Huawei relies on American made parts for its smartphones and networking equipment. Although Huawei received a 90-day waiver to allow time for negotiations, many companies based in the United States have already severed ties.

That has had a knock-on effect.

Lumentum, a Silicon Valley company that makes optical networking gear, said the Huawei was generating about 15 percent of its revenue. Last month, it reduced its expectations for the current quarter by about $35 million, to a maximum of $390 million.

The honor and serving of the latest operational research on Trade War and Effects, continues. The World Students Society thanks authors David Streitfeld and Don Clark.