UK orders Chinese-owned firm to sell most of chip maker

The UK government on Wednesday ordered a Chinese-owned company to divest most of Britain's biggest semiconductor maker, in a move likely to antagonise Beijing.

Business Secretary Grant Shapps was blocking the full takeover of Newport Wafer Fab by Nexperia following a "detailed national security assessment", a government spokesperson said in a statement.

Shapps was requiring Nexperia to sell at least 86 percent of the Wales-based chip fabricator "to prevent against potential national security risks," the spokesperson said.

In his official directive, Shapps said there was a risk relating to "technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities".

Netherlands-based Nexperia, which is owned by China's smartphone giant Wingtech, completed the purchase of Newport Wafer Fab for an undisclosed amount in July last year.

The deal for a leading UK industrial asset sparked a political outcry in Britain amid increasingly strained relations between London and Beijing, and growing scrutiny of Chinese companies' overseas investments.

In 2020, London banned Chinese telecoms giant Huawei from involvement in the roll-out of Britain's superfast 5G broadband network, after US concerns about spying. Beijing was infuriated by that.

UK Prime Minister Rishi Sunak came to power last month talking tough on China but had signalled a desire to engage on trade. He planned bilateral talks with Chinese President Xi Jinping at the G20 summit in Indonesia this week.

But the meeting was called off when Western allies staged a hurried conclave in Bali, in response to a Russian missile attack on Ukraine that embroiled NATO member Poland.

Britain will "continue championing business and open investment, whilst protecting national security", the spokesperson said about the Newport Wafer Fab announcement.

The news was welcomed by China hawks in the UK parliament.

"Our long-term security relies on the resilience of our economy and that means ensuring we don't allow strategic assets to fall into the hands of authoritarian powers for the sake of short-term advancement," Conservative MP Alicia Kearns said.

"I'm sure many will be relieved that we aren't handing over critical security infrastructure to a company with well-documented links to the Chinese state," she said.

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