One of the first stories I wrote for Computerworld, when I came on board in 1997, was about a New Zealand company that was helping out the US space programme.
“Kiwi ingenuity helps mission to Mars”, I think was the gist of it. It concerned a local company that made a small swivel-arm (or something similar) that was used by a US company as part of a larger device that was, in turn, incorporated into something that eventually ended up as part of the space programme. In other words, it was a beat-up.
Now Rakon, maker of most of the world’s quartz crystal oscillators, is the target of a beat-up of a different kind. The story goes like this:
Rakon makes GPS chipsets. Some of these chipsets are bought by a US defence contractor. That US defence contractor sometimes puts those chipsets into missiles and similar devices. Therefore, Rakon kills babies.
I know that’s not quite what the New Zealand Herald story says, but that’s certainly the thrust of its argument: that Rakon knowingly makes and supplies parts for bombs, and it then hides the fact.
There are so many problems with this story that I don’t quite know where to start.
First, the entire GPS system is a military invention. The US military allows non-military use of the GPS system (with its satellites and its location-based capabilities) solely at its discretion. In 2003, the US Department of Defence allowed the “dither” on the GPS network to be switched off, so civilians could get a more accurate fix on their location.
The whole network can be switched to US military-only use at any given moment. Companies that develop software, hardware and services for GPS systems have to work with the military. There’s no way around it. If we’re going to get squeamish about working with the military we’ll have to take a closer look at our use of the internet because, as we all know, the net was developed in conjunction with the US defence agency, DARPA.
This brings us to the question of whether Rakon makes a lot of money from the US military. I visited Rakon’s Auckland factory a few months ago and discovered it looks more like a pizza kitchen than an armoury, with its array of ovens baking quartz crystal. Among the dozens of production lines, and thousands of chips rolling out the door, the portion of that output destined for military use would have comfortably fitted into my lunch box. It’s a niche market, but a vital one because it opens doors to other sectors. That’s what we want, isn’t it? For our exporters to make these relationships work?
Then there’s the question of the bombs themselves.
Assuming as we must that we live in a world where bombs, missiles and weapons of all kind do exist, surely we want them to be accurate? Rakon’s chips help these devices work as advertised. Unsavoury as their use may be, I don’t want to be reading headlines such as: “Missile goes astray, kills innocents” and have the finger pointed at a local company.
The only real question is whether Rakon has breached the terms of the Wassenaar Arrangement by designing and building chips specifically for the US military and then exporting them without the sign-off from the government.
Rakon says it has checked with the appropriate agencies and has been told it doesn’t need a licence because its chips are generic and are used by civilian as well as military customers. They are multi-use rather than single-use chips.
However, government officials are checking again to see if Rakon has followed proper procedures. Should it be decided that Rakon does need a licence to export these chips, one would be granted in the normal course of things, I would expect.
I’ve met the two brothers who run Rakon. It’s a family business, originally started by their father, but, since taking over, Brent and Darren Robinson have done well, both for the company and for New Zealand. They’ve cornered the world market for the supply of high-quality quartz crystal oscillators by doing all the right things. They’re thorough. They reinvest in the company, and in research and development. They build their own equipment when they have to, and they have a sound engineering background. They are the epitome of the Kiwi business made good. They are a bit uncomfortable talking to the media about how cool their company is; they just want to get on and get the job done. That’s always a good sign in my book.
Fortunately, Rakon’s investors aren’t too worried about all the media fuss, it would seem. Indeed, the newly listed company’s share price has actually increased since the “news” about the company came out. My faith in the power of the market may well be restored.