UK Forces Chinese Divestment from Scottish Semiconductor Firm

The United Kingdom has compelled a Chinese holding company to divest its stake in a Scottish semiconductor business. This decision was made based on an assessment of national security threats under the National Security and Investment Act, enacted in 2021.

Under this law, the British government is authorized to intervene in business transactions, such as acquisitions, across 17 sensitive economic sectors to protect national interests. The focus of this intervention is Future Technology Devices International (FTDI), headquartered in Glasgow. The company was acquired by a Chinese-backed holding three years ago, drawing government scrutiny.

Following an analysis, the government ordered the sale of 80.2% of FTDI’s shares. The sale must be executed within a set timeframe and through a strictly defined process. This decision aims to mitigate potential risks associated with the misuse of British technology against national security.

Special emphasis is placed on safeguarding UK-developed semiconductor technology and intellectual property, which could potentially be weaponized against critical infrastructure. Authorities believe that the divestiture will prevent adverse impacts on national security.

This move marks a continuation of London’s increasingly stringent stance on transactions involving Chinese capital. Notably, in 2021, the largest British microprocessor manufacturing plant, Newport Wafer Fab, was acquired by Nexperia (controlled by the Chinese company Wingtech) for £63 million. Although initially approved by the Department for Business and the National Security Adviser, the Foreign Affairs Committee later criticized the acquisition, citing a threat to national sovereignty.

In 2022, the government mandated Nexperia to divest 86% of its stake in the facility, citing concerns over potential resumption of advanced semiconductor production and national security risks.

It is also worth noting that last year, the UK tightened export regulations on semiconductors to China, rejecting most applications for technology sales. The United States had previously enacted similar measures, restricting China’s access to advanced semiconductor chips and technology to prevent their use in military systems.

These actions are part of a broader strategy to protect key technologies from foreign threats. As part of this initiative, the National Protective Security Authority (NPSA) was established within MI5 to assist businesses in safeguarding against state-sponsored efforts to steal confidential information.