The UK government has recently mandated a Chinese holding company to divest a stake in a Scottish semiconductor business in order to safeguard national security. This decision was enacted under the National Security and Investment Act of 2021, which grants the government authority to intervene in sensitive sectors of the economy to protect national interests.
The company at the center of this directive is Future Technology Devices International (FTDI), based in Glasgow, which had previously acquired a stake with Chinese involvement, prompting scrutiny from authorities. The government has now instructed the sale of 80.2% of FTDI shares to mitigate potential risks associated with the utilization of British technologies for purposes detrimental to the nation’s security.
This move underscores London’s increasingly stringent approach towards transactions involving Chinese capital, following a similar instance in 2021 where Nexperia, under Chinese control, acquired the largest British factory producing microprocessors for 63 million pounds. Initially approved by the Ministry of Business and the National Security Council, the deal faced criticism from the Foreign Affairs Committee over sovereignty concerns.
In the latest development, the government has compelled Nexperia to sell 86% of the shares of the enterprise in 2022, citing concerns about the potential revival of complex semiconductor production and its implications for national security. Additionally, the UK has tightened regulations on semiconductor exports to China, mirroring actions taken by the United States to restrict Chinese access to advanced semiconductor technology to prevent its use in military applications.
These measures form part of a broader strategy aimed at safeguarding key technologies from foreign threats, with the establishment of the National Security Protection Service (NPSA) under MI5 to assist businesses in countering state-sponsored efforts to steal confidential information.