US and UK missile destroyers put out of action by microchips
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The Government has decided not to block the sale of Newport Wafer Fab, the UK’s largest semiconductor plant, to Nexperia, a Dutch subsidiary of the Chinese technology company Wingtech. Semiconductors, also known as microchips, are a critical component of electronic devices, including smartphones. A major controversy broke out after Nexperia attempted to buy the plant last spring.
Following the uproar, in June, Mr Johnson announced an investigation into the case, launching a review by the Government’s national security adviser, Sir Stephen Lovegrove.
Six months later, Sir Lovegrove has concluded that there is no risk to the UK’s security, and thus there is no reason to block the sale, Politico reported.
Conservative MPs have already raised alarm bells following the decision, arguing that Mr Lovegrove is applying too narrow of a definition of UK security.
Tom Tugendhat, the chairman of the House of Commons foreign affairs committee, said: “It’s not clear why we haven’t used our new powers under the National Security and Investment Act to fully review the takeover of one of our leading compound semiconductor companies.”
He added: “This is an area where China is sinking billions to compete.
“The government has no clear strategy to protect what’s left of our semiconductor industry.”
The National Security and Investment Act (NSI) came into force on January 4, 2022.
The post-Brexit act gives the Government powers to scrutinise and intervene in business transactions, such as takeovers, to protect national security.
It comes after Mr Johnson promised to “back” British businesses.
Sir Iain Duncan Smith, a former Conservative leader called the decision to sell the factory “ridiculous.”
He added: “Kwasi Kwarteng needs to stand up for access to key technologies in the West which China is determined to get control over.”
“If the Government goes down this road, it will become yet another step in the pathetic process of appeasing China who right now is supporting Russia and plans to pose a direct and deliberate threat to the West’s access to microchips and other key components for electronic equipment.”
The £63million deal to buy the microchip plant generate controversy as experts raised concerns over the increasing Chinese ownership of assets in Britain.
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The sale also came during a global microchip shortage, raising fears that China would dominate more of the semiconductor industry.
During the investigation last year, a former security official anonymously said: “What Newport Wafer Fab do at the moment is not that exceptional — you can argue that it’s not strategically important, and that’s a plausible case.”
“But it is part of an existing industrial base which is capable of developing further at a lower cost, and if you sell it to the Chinese, then it’s gone from your strategic orbit of control and long-term capability.”
In the past few years, China’s semiconductor industry has grown exponentially, with the country’s chip industry registering an extraordinary growth rate of 30.6 percent to reach $39.8 billion (£30.3 billion) in total annual sales in 2020.
The country now controls more than nine percent of the global semiconductor market, surpassing Taiwan and closing in on the EU, which has 10 percent of the share.
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