Kwasi Kwarteng, Britain’s Secretary of State for Business, Energy and Industrial Strategy, on May 25 ordered a thorough review of the takeover of the semiconductor company on national security grounds. According to information from Wall Street JournalAmerican diplomacy would have discreetly pushed in this direction because of the Chinese origin of the future owner.
Semiconductors, a highly strategic sector
This is one of the very first mobilizations of a recent British text, the law on national security and investments. It allows the United Kingdom to block the acquisition of a company by a foreign player if it is considered strategic.
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With the shortage of semiconductors, the Newport Wafer Fab, installed in Wales, could fall into this category. It transforms silicon balls into wafers on which the chips are cut.
The acquisition by Nexperia is only 75 million euros, the Welsh company being faced with financial difficulties. Nexperia is a subsidiary of the Chinese Wingtech, a subcontractor of Huawei or Samsung, 22% owned by various structures linked to Beijing.
The operation had shaken the summer of 2021 for Boris Johnson’s government. The opposition and some major deputies of the conservative clan, such as Tom Tugendhat, chairman of the Parliament’s Foreign Affairs Committee, had asked to interrupt or at least to investigate the takeover of Newport Wafer Fab.
Boris Johnson had ended up starting a timid investigation, while hammering that it was necessary to refrain from having a hostile attitude in principle to China. Behind the scenes, opponents of the acquisition were supported by American diplomacy.
According to the sources of Wall Street Journal, a member of the United States Embassy in London has increased meetings with British officials for several weeks in this direction. Without directly requesting a cancellation of the operation, he was responsible for making it clear that on the other side of the Atlantic there was a preference for it not to succeed.
The United States has done the same with the Netherlands to prevent ASML Holding NV, the manufacturer of the most advanced semiconductor manufacturing equipment in the world, from selling to Chinese companies.
The British in the middle of the Sino-American rivalry
Washington, be it the Trump administration or now the Biden administration, is absolutely intent on hampering China’s technological development. The weakness of the Middle Kingdom is known to all, its dependence on imported semiconductors. Despite the country’s efforts to move towards autonomy, the road remains long, especially for the most advanced chips.
By blocking the way to a Chinese-flagged Newport Wafer Fab, the United States hopes to slow down Chinese efforts in the field of electric cars. Consulted, the Chinese Embassy in the United Kingdom denounced the underground activity of the Americans, it perceives a break with the rules of international trade. The investigation launched on May 25 by the British government must deliver its conclusions in thirty days at the earliest.