UK Business Secretary Kwasi Kwarteng said on Wednesday, May 25, that the sale of Britain’s largest microchip factory to a Chinese company faces a national security review. [quote] “We welcome overseas investment, but it must not threaten Britain’s national security.” [end quote] He added that there would be a “full assessment” of the acquisition of the Welsh microchip factory under the National Security and Investment Act.

Last year, The British government reportedly approved the sale of Newport Wafer Fab to China’s Nexperia after it failed to pay its debts, despite concerns over national security.

Nexperia, based in the Netherlands, has offices in Britain. It is owned by JAC Capital, a subsidiary of JIC Capital, a Chinese state-owned investment firm that claims to run independently.

Prime Minister Boris Johnson said he did not want to drive Chinese investment away from Britain because of “anti-China spirit.” However, he asked national security adviser, Sir Stephen Lovegrove, to look at the deal amid widespread concern over its potential implications. Lovegrove then reported that the sale of the semiconductor producer to China did not rise to the level of presenting a national security risk.

MPs have previously criticized the UK government over the case.

Ciaran Martin, the former chief executive of the National Cyber Security Centre, described the acquisition as posing a more significant threat to British interests than Huawei’s involvement in the 5G network.

Tom Tugendhat, the Foreign Affairs Committee chairman, welcomed the business secretary’s decision, [quote] “We need to maintain a base to build on to ensure the UK is resilient. This isn’t just about security today but independence tomorrow.” [end quote] He previously voiced concern that competitors in China had a track record of using foreign investments to gain access to essential technologies and information.

Besides the attempted takeover of Newport Wafer Fab, Chinese firms have been steadily buying up critical infrastructure in Britain. They spent at least £135 billion to buy ownership stakes in Thames Water, Heathrow airport, and UK Power Networks.

Last year, British Steel—which produces one-third of the domestic steel supply—was also taken over by the Communist Party-tied Jingye Group.

The Act now gives the government 30 days to investigate and the power to intervene retrospectively.

It could force the company to reduce its shareholding to the 14% it originally owned.

Sign up to receive our latest news!

By submitting this form, I agree to the terms.